A. ITE Management L.P. is a Delaware limited liability company formed on May 29, 2007 (f/k/a JNF Management LLC and D Aaron Asset Management LLC). The Firm is an investment adviser located in New York, NY. The Firm’s “Principals” are Jason Koenig, David Smilow and James Unger. Mr. Koenig and Mr. Smilow are considered ITE’s principal owners for purposes of this disclosure document. B. The Firm serves as an investment adviser to pooled investment vehicles (each, a “Fund,” collectively, the “Funds”), including ITE Institutional Rail Fund L.L.C., CCM Railcar Holdco L.P., ITE Rail Fund L.P. (collectively, the “Rail Funds”), ITE Air Master Fund II L.P. (the “Air Fund,” a Cayman Island exempted limited partnership) and ITE Air Fund L.P. (the “Domestic Fund,” a Delaware limited partnership, and collectively with Air Fund, the “Air Funds”), as well as any vehicles established for the purposes of pursuing alternative investments or side agreements with an individual investor (collectively, the “Clients”). The Funds are exempt from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”), pursuant to Section 3(c)(7) of the Investment Company Act. The Firm provides discretionary investment management services to the Funds pursuant to the Funds’ investment management agreements with ITE. The Firm manages the assets of the Funds in accordance with the applicable limited partnership agreement, offering memoranda and/or other such governing agreements (the “Offering Documents”). The Firm is affiliated with certain other entities that are or may become general partners (each a “General Partner” and collectively the “General Partners”) to each of the Funds. Each of ITE’s current Funds are controlled by those General Partners that ITE is affiliated with as of the date of this Brochure. The advisory services of ITE and of the General Partners are described in this Brochure and in the Offering Documents. C. The Firm does not tailor advisory services to the individual or particular needs of investors in the Funds. As a condition of subscription, Fund investors will accept the terms of advisory services as set forth in the Fund’s Offering Documents. The Firm has broad investment authority with respect to the Funds and, as such, investors should consider whether the investment objectives of the Funds will be in line with their individual objectives and risk tolerance prior to investment. Should an individual investor require tailored advisory services, the Firm may establish a separate side agreement with an individual investor. D. The Firm does not participate in wrap fee programs. E. ITE Institutional Rail Fund L.L.C. (the “Institutional Fund”) has a wholly owned equity interest in Railcar Holdings PAS II, L.L.C. (“PAS II”). PAS II has issued debt to Institutional Fund investors at the then current market interest rates with market covenants. The debt is governed by a master facility agreement between the Institutional Fund and PAS II. The Firm serves as the administrator to PAS II. Under the administration agreement the Firm provides or coordinates legal, accounting, tax and other professional services. F. Currently, the Domestic Fund invests all its investible assets in the Air Fund. The Air Fund focuses on direct investments in the aviation industry primarily in the acquisition of and investment in commercial aircraft, engines and other assets and/or related platforms (including, without limitation, interests in master limited partnerships, corporate securities, debt securities and debt obligations, including those that provide equity upside, as well as options, residuals and other call rights) that are directly or indirectly related to the aviation industry. G. As of December 31, 2019, ITE manages $1,452,898,470 in regulatory assets on a discretionary basis. please register to get more info

A. The Firm’s fees and compensation may vary among the Funds. The specific terms of such arrangements are established by the Firm and set forth in each Fund’s Offering Documents. The Firm charges a management fee for its management and other services (the “Management Fee”). The General Partner may, in its sole discretion, waive, reduce or calculate differently (but not increase in the aggregate) such fees for any limited partner without limitation, a limited partner that is a member, partner, affiliate or employee of the General Partner or the Firm, a member of the immediate family of such a person or a trust or other entity for the benefit of such a person. The Firm accepts subscriptions by investors for interests in the Funds that meet the definition of a “qualified purchaser”, as defined in the Investment Company Act. Therefore, ITE is not required to disclose a fee schedule. The Firm receives performance-based fees, as more fully described in Item 6. B. For those Funds that charge a Management Fee, the Firm deducts Management Fees from the Funds’ accounts quarterly in advance. Management Fees are amortized monthly by the Firm over the fiscal quarter for which such Management Fee is paid. C. In addition to the Management Fes described above, the Funds are responsible for certain operating expenses as disclosed in the Offering Documents. Such operating expenses include, without limitation: investment expenses, whether or not such investments are consummated (costs and expenses associated with the investigation of investment opportunities (whether or not consummated), negotiating, financing, sourcing, acquiring, holding, hedging, settling and disposing of its investments or proposed investments, including, without limitation, expenses relating to the maintenance and/or operation of the investments of the Funds charged by third party service providers); Advisory Committee expenses, investment-related travel expenses (which are travel expenses incurred by the Investment Manager or the General Partner related to the purchase or sale, on-going due diligence, maintenance and/or monitoring of the Funds’ investments, whether or not such investments are consummated); third-party professional fees (including, without limitation, expenses of consultants, investment bankers, attorneys, accountants and other experts) relating to investments; brokerage commissions, information-related expenses, clearing and settlement charges, custodial fees, interest expenses, appraisal fees and expenses and similar expenses; fees and expenses relating to software tools, programs or other technology utilized in managing the Funds (including, without limitation, third-party software licensing, implementation, data management and recovery services and custom development costs); research and market data; out-of-pocket fees and expenses incurred by the Funds or the Investment Manager in connection with annual investor meetings, administrative expenses (including, without limitation, fees and expenses of a Fund’s administrator; legal and litigation expenses; external accounting and valuation expenses (including, without limitation, the cost of accounting software packages); audit and tax preparation expenses; costs related to liability insurance, umbrella insurance, property insurance and excess or contingent insurance with respect to the Funds and/or any of their assets, and errors and omissions insurance for the General Partner and the Investment Manager; costs of printing and mailing reports and notices; taxes; corporate licensing; regulatory expenses (including expenses related to preparing and making regulatory and compliance filings associated with the Funds and the Funds’ investment activities, such as filing fees and costs of software and systems relating to such filings), fees and expenses incurred in connection with the preparation of filing of Form PF; indemnification expenses; costs and expenses incurred in connection with meetings of the Advisory Committee and other permissible expenses of the Advisory Committee; and extraordinary expenses (including fees and expenses incurred in connection with liquidation of the Funds). The Funds will incur brokerage costs if applicable; however, due to the nature of the Firm’s business, broker-dealers are not generally used. See Item 12 – Brokerage Practices. D. For those Funds that charge a Management Fee, the Management Fees are paid in advance on a quarterly basis. In the unlikely event that ITE does not provide services for a full period, or if accounts are terminated according to the terms set out in each Fund’s Offering Documents before the end of the relevant fiscal quarter, a pro-rata portion of the Management Fee will be returned, based on the actual number of months remaining in the relevant fiscal quarter. E. With respect limited partners admitted to the ITE Rail Fund L.P. after January 1, 2018, Management Fees are charged (A) on each date such a limited partner makes a capital contribution to the ITE Rail Fund L.P., 1% of such capital contribution and (B) 0.3750% (1.5% per annum) of the beginning balance of each capital account of a limited partner (before taking into account the estimated accrued Incentive Allocation, if any, that has accrued as of the applicable calculation date or have been made during the applicable calculation period) for each fiscal quarter. F. The Firm receives compensation for its services as the administrator to PAS II. Under the administration agreement, PAS II agrees to pay the administrator a monthly administration fee in an amount equal to $1,000.00. G. Neither ITE nor any of its supervised persons will accept compensation for the sale of securities or other investment products. H. Certain employees of ITE may be engaged by portfolio companies as consultants and may be compensated by such company. With respect to ITE Rail Fund L.P., any such engagement is approved the Advisory Committee. please register to get more info

The fact that a portion of ITE’s compensation is directly computed on the basis of profits generated by the sale or disposition of the Fund’s assets may create an incentive for the Firm to make investments more speculative than would be the case in absence of such compensation. However, ITE is committed to acting at all times in the best interests of the Funds. To this end, ITE has implemented internal controls to address the potential conflicts associated with performance-based fees, as more fully described in each Fund’s Offering Documents. As of the date of this Brochure, the Firm has not established a co-investment vehicle. Should the Firm establish a co-investment vehicle, such vehicle may be subject to fees and allocations which may differ among co-investors and also may differ from the fees and allocations borne by the Funds. Rail Funds Each of the General Partners receives performance-based compensation or an “Incentive Allocation” (as described below) from the Rail Funds, as specified in the Offering Documents or investment management agreements of each Fund. Generally, at the end of each fiscal year, the General Partners will receive a performance- based allocation to the respective General Partner’s capital account of a portion of the net capital appreciation (if any) allocated to each investor’s capital account for such fiscal year after increasing net capital appreciation for distributions made pursuant to an income distribution election during such fiscal year and any investor-related taxes paid or accrued by the Rail Funds and reducing net capital appreciation by an amount equal to the applicable Management Fee debited from such capital account, subject to attaining a hurdle rate described below. If, at the end of a fiscal year, the Rail Funds have generated net capital appreciation (after increasing for distributions made pursuant to an income distribution election and any investor-related taxes paid or accrued by the Rail Funds during the applicable fiscal year and deducting the Management Fee debited from such capital account) in the aggregate for such fiscal year, then such net capital appreciation will be reallocated at such time in accordance with the following paragraph and as follows: (i) first, 100% to such investor’s capital account until the balance in such investor’s capital account’s corresponding an additional “loss recovery account” (as defined in the Offering Documents) is equal to zero; (ii) second, 100% to such investor’s capital account until such investor’s capital account has been allocated the hurdle amount for such fiscal year or shorter period, as applicable; (iii) third, 50% to the General Partner’s capital account and 50% to such investor’s capital account until the aggregate amount allocated to the General Partner’s capital account pursuant to this clause (iii) for such fiscal year or shorter period, as applicable, on account of such investor’s capital account equals (A) with respect to the ITE Rail Fund L.P., the applicable Incentive Allocation Rate (as defined below) of the sum of the amounts allocated pursuant to clause (ii) and this clause (iii) for such fiscal year or shorter period, (B) with respect to the Institutional Fund, 10% of the sum of the amounts allocated pursuant to clause (ii) and this clause (iii) for such fiscal year or shorter period and (C) with respect to the CCM Railcar Holdco L.P., 7.5% of the sum of the amounts allocated pursuant to clause (ii) and this clause (iii) for such fiscal year or shorter period, as applicable (the “catch-up”, and together with the amounts allocated to the General Partner’s capital account in clause (iv) below, the “Incentive Allocation”); and (iv) thereafter, (A) with respect to ITE Rail Fund L.P. the applicable Incentive Allocation Rate to the General Partner’s capital account and 100% minus the applicable Incentive Allocation Rate to such investor’s capital account, (B) with respect to the Institutional Fund, 10% to the General Partner’s capital accounts and 90% to such investor’s capital account and (C) with respect to the CCM Railcar Holdco L.P., 7.5% to the General Partner’s capital accounts and 92.5% to such investor’s capital account. “Incentive Allocation Rate” means 20% or such other rate as may be agreed to by an investor and the General Partner in a side letter agreement. In the sole discretion of the Firm, the Incentive Allocation may be waived, reduced or calculated differently (but not increased in the aggregate) with respect to the capital account(s) of any investor, including, without limitation, an investor that is a member, partner, affiliate or employee of the Firm, a member of the immediate family of such a person or a trust or other entity for the benefit of such a person. All Incentive Allocations vest over a two-year period and are subject to clawback provisions as defined in and set forth in each Rail Funds’ limited partnership agreements. The General Partner may, in its sole discretion, waive, reduce or calculate differently (but not increase in the aggregate) such fees for any limited partner without limitation. Air Funds The General Partner is entitled to receive performance-based compensation of 20% of the realized profits. Since the assets yield current income before they are sold, the General Partner will first only receive 10% of the Distributable Cash (cash received by the Air Fund, net of expenses, reserves and amounts held back for tax reasons or any other permitted purpose) attributable to a limited partner until the point in time when such limited partner has received a complete return of capital plus its preferred return. After that, there will be a 50/50 catchup so that the General Partner "catches up" and receives 20% of the total profits. After the catchup, distributions will be split between the General Partner and such limited partner 80/20. Apportionments of Distributable Cash will be made in the first instance at the Air Fund level to the General Partner and the Domestic Fund pro rata based on the Air Fund’s ownership interest. The amount apportioned to the General Partner will be distributed in its entirety to the General Partner. Distributable Cash apportioned to each limited partner will then be distributed from the Air Fund to the General Partner and the Domestic Fund on behalf of such limited partner in the following amounts and order of priority: (a) 90/10 Split: First, 90% to the Domestic Fund on behalf of such limited partner and 10% to the General Partner until the Domestic Fund has received distributions from the Air Fund in respect of such limited partner in an amount equal to 100% of such limited partner's capital contributions; (b) 5% Preferred Return: Second, 90% to the Domestic Fund on behalf of such limited partner and 10% to the General Partner until the Domestic Fund has received cumulative distributions from the Air Fund in respect of such limited partner pursuant to this clause (b) and clauses (c) and (d) below in an amount equal to a 5% annual compounded internal rate of return on such limited partner's capital contributions (the distributions to the General Partner described in clause (a) and this clause (b) being referred to collectively as "Income Carried Interest Distribution");

(c) General Partner Catch-up: Third, 50% to the General Partner and 50% to the Domestic Fund on behalf of such limited partner until the cumulative distributions to the General Partner with respect to such limited partner equals 20% of the total amounts distributed to (i) the Domestic Fund with respect to such limited partner pursuant to the immediately preceding clause (b) and this clause (c) and (ii) the General Partner pursuant to clauses (a) and (b) above and this clause (c); and

(d) 80/20 Split: Thereafter, 80% to the Domestic Fund on behalf of such limited partner and 20% to the General Partner (the distributions to the General Partner described in clause (c) and this clause (d) being referred to collectively as "Profit Carried Interest Distribution", and together with Income Carried Interest Distribution, "Carried Interest Distribution"). In the sole discretion of the Firm, the Carried Interest Distributions may be waived, reduced or calculated differently (but not increased in the aggregate) with respect to any limited partner, including, without limitation, a limited partner that is a member, partner, affiliate or employee of the General Partner or the Investment Manager, a member of the immediate family of such a person or a trust or other entity for the benefit of such a person. Carried Interest Distributions are subject to clawback provisions as defined in and set forth in the Air Funds’ Offering Documents. please register to get more info

As further described in Item 4 of this Brochure, ITE provides investment advisory services to pooled investment vehicles which generally operate as exempt investment companies under the Investment Company Act. The Funds are typically limited to individuals and entities that meet the criteria of “qualified purchasers”, as defined in the Investment Company Act.

Prospective investors should refer to the Offering Documents of the Funds for information on minimum investment requirements. Typically, ITE may require a minimum investment, although ITE maintains discretion to individually waive, increase or reduce the minimum investment required. The Firm may, from time to time, offer one or more investors and/or other third-party investors the opportunity to co-invest with a Fund in particular investments. The Firm is not obligated to arrange co-investment opportunities, and no investor will be obligated to participate in such an opportunity. As of the date of this Brochure, ITE has not established any co-investment vehicles, nor has it arranged any co-investment opportunities. Certain Funds invest in assets through a joint venture vehicle with a third-party rail car operator and may enter into other such joint ventures in the future. please register to get more info

A. The descriptions set forth in this Brochure of specific advisory services that the Firm offers and investment strategies pursued, and investments made by the Firm on behalf of the Funds, should not be understood to limit in any way its investment activities. The Firm may offer any advisory services, engage in any investment strategy and make any investment, including any not described in this Brochure, that the Firm considers appropriate, subject to each Fund’s investment objectives and guidelines. The investment strategies the Firm pursues are speculative and entail substantial risks. Investors in the Funds should be prepared to bear a substantial loss of capital. There can be no assurance that the investment objectives of any Fund will be achieved. General Risk of Loss. An investment in a Fund will involve significant risk. No guarantee or representation is made that a Fund’s investment program, including, without limitation, a Fund’s investment objectives, diversification strategies or risk monitoring goals, will be successful. Investment results may vary substantially over time. No assurance can be made that profits will be achieved or that substantial or complete losses will not be incurred. Past investment results of the investments made by the investment professionals of the Firm are not necessarily indicative of their future performance. B. Listed below are some of the risks associated with investing in a Fund. The following explanation of certain risks is not exhaustive, but rather highlights some of the more significant risks involved in a Fund’s investment strategies. Please note, not all risks are applicable to each Fund; there are important differences in how these risks may affect each Fund. For a complete explanation of the relevant investment strategies and their associated risks specific to each Fund, investors should review the relevant Offering Documents, which may contain additional explanations of strategies, risks and other related details not discussed below. General Risks Applicable to the Air Funds and Rail Funds Dependence Upon the General Partner and the Investment Manager. Limited partners should be aware that they will have no right to participate in the management of the Funds, the General Partner or the Investment Manager, and they will have no opportunity to select or evaluate any of the Funds’ respective investments or strategies. Accordingly, limited partners should not invest in the Funds unless they are willing to entrust all aspects of the management of the Funds and their respective investments to the discretion of the General Partner and the Investment Manager. Dependence on Service Providers. The Funds are dependent upon the relevant counterparties and the businesses that are not controlled by the Investment Manager that provide services to each Fund (the "Service Providers"). Examples of Service Providers include the fund administrator, prime brokers, custodians, legal counsel and the auditors. Errors are inherent in the business and operations of any business, and although the Investment Manager will adopt measures to prevent and detect errors by, and misconduct of, counterparties and Service Providers, and transact with counterparties and Service Providers it believes to be reliable, such measures may not be effective in all cases. Errors or misconduct could have a material adverse effect on the Fund and the limited partner's investments therein. The Funds are reliant on the performance of the Service Providers. Each limited partner's relationship in respect of its investment is with the relevant Fund only. Accordingly, absent a direct contractual relationship between the investor and the relevant Service Provider, no limited partner will have any contractual claim against any Service Provider for any reason related to its services to the Fund. Instead, the proper plaintiff in an action in respect of which a wrongdoing is alleged to have been committed against the Fund by the relevant Service Provider is, prima facie, the Fund.

Retention and Motivation of Employees. The success of the Funds is dependent upon the talents and efforts of highly skilled individuals employed by the Investment Manager and the Investment Manager's ability to identify and willingness to provide acceptable compensation to attract, retain and motivate talented investment professionals and other employees. There can be no assurance that the Investment Manager's investment professionals will continue to be associated with the Investment Manager throughout the life of the Funds, and the failure to attract or retain such investment professionals could have a material adverse effect on the Funds and the limited partners' investments therein. Competition in the financial services industry for qualified employees is intense and there is no guarantee that, if lost, the talents of the Investment Manager's investment professionals could be replaced.

Investment and Due Diligence Process. Before making investments, the Investment Manager will conduct due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Investment Manager may be required to evaluate important and complex business, financial, tax, accounting and legal issues. When conducting due diligence and making an assessment regarding an investment, the Investment Manager will rely on the resources reasonably available to it, which in some circumstances, whether or not known to the Investment Manager at the time, may not be sufficient, accurate, complete or reliable. Due diligence may not reveal or highlight matters that could have a material adverse effect on the value of an investment.

ESG Policy. The Investment Manager maintains a policy that, among other things, states that environmental, social and governance ("ESG") factors may be, and often are, taken into consideration as part of the investment process (the "ESG Policy"). The ESG Policy allows the Investment Manager's investment professionals to take steps, as they deem appropriate under the circumstances, to assess a variety of ESG factors, which may vary depending on the nature of the investment opportunity (including, but not limited to: energy efficiency; climate change; sustainability; worker health and safety; unethical labor practices; corporate transparency; compliance; and the mitigation of conflicts of interest) in the process of evaluating potential investment opportunities for the Funds. Limited partners should be aware that the ESG Policy may preclude or limit certain profitable investments (or may result in earlier than planned exits, where a longer holding period would have resulted in higher profits or lower losses). Liability of the Fund and Separate Classes. Each Fund is a single legal entity and there is no limited recourse protection for any class of interests. Generally, creditors of a Fund may enforce claims against all assets of the Fund. All assets of the Fund may be available to meet all liabilities of the Fund, even if, in either case, the liability relates to a particular class of interests. In addition, in order to facilitate investments or financing, the Fund may guarantee certain obligations of the Fund or one or more of its affiliates. In such circumstances all of the assets of the guarantor generally will be available to satisfy the guaranty obligation. Such arrangements may expose the Fund to an increased risk of loss.

The Investment Manager generally intends to make investments through multiple subsidiaries. Creditors (except with respect to tax creditors, such as the Internal Revenue Service) of one subsidiary generally may not enforce a claim against the assets of another subsidiary, unless the Fund guarantees the obligations of such subsidiary to such creditor; provided, however, that cross-class liability may still exist in such arrangements.

Effect of Substantial Losses. If, due to extraordinary market conditions or other reasons, the Funds were to incur substantial losses, the revenues of the Investment Manager may decline substantially. Such losses may hamper the Investment Manager's ability to (i) retain employees, (ii) provide the same level of service to the Funds as it has in the past, and (iii) continue operations. In-Kind Distributions. Under certain circumstances a withdrawing investor may receive distributions in kind in lieu of, or in combination with, cash. Such distributions may include loans, interests in one or more liquidating vehicle holding investments owned by the Funds, or participations therein. To the extent a withdrawing investor is distributed interests in special purpose vehicles, such withdrawing investor will continue to be at risk with respect to the Funds’ business. The value of the investments distributed in kind may increase or decrease before they are sold either by the withdrawing investor, if received directly, or by ITE or its affiliates, if held through a special purpose vehicle. In either case, the withdrawing investor will incur transaction costs in connection with the sale of any such investments and, in the case of interests in a liquidating vehicle, will bear a proportionate share of the operating and other expenses borne by such vehicle. Instruments distributed in kind will not be readily marketable. The risk of loss and delay in liquidating these vehicles will be borne by the investor, with the result that such investor may ultimately receive less cash than it would have received on the date of withdrawal if it had been paid in cash. Furthermore, to the extent that a withdrawing investor receives interests in special purpose vehicles, such withdrawing investor will generally have no voting rights or any control over when and at what price the investments in which such vehicles have an interest are sold. Valuation of Assets and Liabilities. Each Fund’s assets and liabilities are valued in accordance with the Firm’s valuation policy. The valuation of any asset or liability involves inherent uncertainty. The value of an investment determined in accordance with the valuation policy may differ materially from the value that could have been realized in an actual sale or transfer for a variety of reasons, including the timing of the transaction and liquidity in the market. Uncertainties as to the valuation of portfolio positions could have an impact on the net asset value of the Funds if the valuation applied should prove to be incorrect. Coronavirus Risk. In December 2019, a novel strain of coronavirus (known as COVID- 19) surfaced in Wuhan, China, which has resulted in the temporary closure of many corporate offices, retail stores, and manufacturing facilities across China and South Korea, among other affected countries. These closures have caused the disruption of manufacturing supply chains and local and global economies, the duration of which remains uncertain. As of March 2020, COVID-19 has spread across the world, which may result in additional market disruptions. The extent to which COVID-19 may negatively affect the operations of the Investment Manager and the performance of the Funds is difficult to predict. General market disruptions may affect the ability of certain investors to access capital and thus, fund capital commitments to the Funds. Disruptions specific to the transportation sector may affect the profitability of certain air and rail-related investments held by the Funds. Ultimately, the potential impact on the operations of the Investment Manager and performance of the Funds will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of COVID-19 and further actions taken by authorities and other entities to contain COVID-19 or treat its impact. Cybersecurity Risk. As part of its business, the Firm processes, stores and transmits large amounts of electronic information, including information relating to the transactions of the Funds and personally identifiable information of the investors. Similarly, Service Providers, especially the administrator, may process, store and transmit such information. The Firm has procedures and systems in place to protect such information and prevent data loss and security breaches. However, such measures cannot provide absolute security. The techniques used to obtain unauthorized access to data, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time. Hardware or software acquired from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security. Network connected services provided by third parties to the Firm may be susceptible to compromise, leading to a breach of the Firm’s network. The Firm’s systems or facilities may be susceptible to employee error or malfeasance, government surveillance, or other security threats. On-line services provided by the Firm to the investors may also be susceptible to compromise. Breach of the Firm’s information systems may cause information relating to the transactions of the Funds and personally identifiable information of the investors to be lost or improperly accessed, used or disclosed. The Service Providers are subject to the same electronic information security threats as the Firm. If a Service Provider fails to adopt or adhere to adequate data security policies, or in the event of a breach of its networks, information relating to the transactions of the Funds and personally identifiable information of the investors may be lost or improperly accessed, used or disclosed. The loss or improper access, use or disclosure of the Firm’s or the Funds’ proprietary information may cause the Firm or the Funds to suffer, among other things, financial loss, the disruption of its business, liability to third parties, regulatory intervention or reputational damage. Any of the foregoing events could have a material adverse effect on the Funds and the investors’ investments therein.
ASC 820—Fair Value Measurements and Disclosures; Potential GAAP vs. Valuation
Policy Reporting Difference. The Funds’ assets and liabilities are valued in accordance with the Firm’s valuation policy. However, for purposes of preparing the Funds’ annual audited financial statements, which are prepared in accordance with GAAP, certain of the Funds’ assets and liabilities may be valued in a manner that, while consistent with GAAP, is different from the manner in which such assets are valued pursuant to the valuation policy. Specifically, for purposes of GAAP-compliant financial reporting, the Funds are required to follow a specific framework for measuring the fair value of its assets and liabilities, and is required to provide certain additional disclosures regarding the use of fair value measurements in its audited financial statements. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, formerly known as FAS 157 (“ASC 820”), defines and establishes a framework for measuring fair value under GAAP and expands financial statement disclosure requirements relating to fair value measurements. Other valuation-related requirements are contained in other provisions of GAAP, and sections of the codification. Additional FASB ASCs and updates and additional provisions of GAAP that may be adopted in the future may also impose additional, or different, specific requirements as to the valuation of assets and liabilities for purposes of GAAP-compliant financial reporting. Accordingly, to the extent that GAAP would require any of the Funds’ assets or liabilities to be valued in a manner that differs from the valuation policy, such assets or liabilities will be valued (x) in accordance with GAAP, solely for purposes of preparing the Funds’ GAAP-compliant annual audited financial statements, and (y) in accordance with the valuation policy (without regard to any GAAP requirements relating to the determination of fair value) for all other purposes, including, without limitation, for purposes of allocating gains and losses among the investors, which, as described in the Offering Documents, is relevant to, among other things, the determination of net asset value of a capital account, the calculation of the Management Fee and the Incentive Allocation, and the amounts payable by the Funds in respect of a withdrawal by or distribution to an investor. Generally, accounting rules (including ASC 820) applicable to investment funds and various assets in which they invest are evolving. Such changes may adversely affect the Funds. For example, the evolution of rules governing the determination of the fair market value of assets to the extent such rules become more stringent would tend to increase the cost and/or reduce the availability of third-party determinations of fair market value. This may in turn increase the costs associated with selling assets or affect their liquidity due to inability to obtain a third-party determination of fair market value. ASC 740—Accounting Changes; Effect on Net Asset Value. Pursuant to FASB ASC 740, formerly known as FIN 48 (“ASC 740”), which provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in financial statements, the Funds are required to determine whether a tax position, based on its technical merits, meets a more-likely-than-not recognition threshold that the position will be sustained upon examination. As a result of such a determination, the Funds may be required to recognize a contingent tax liability in its net asset value calculation if the related tax position meets the recognition criterion in ASC 740 and, conversely, may be required to unrecognize a contingent tax liability in its net asset value calculation if the related tax position does not meet the recognition criterion in ASC 740. In addition, the net asset value of the Funds may be adjusted if an uncertain tax position is settled. Since ASC 740 has only recently been adopted, the Funds may be required to recognize in its financial statements contingent liabilities that under prior custom and practice in the industry would not have been recognized. Such contingent liabilities may also relate to time periods that predate an investor’s investment in the Funds. Recognition and measurement of each tax position, including any tax position for which there is a lack of authority and audit experience, is determined by the Principals, in its sole discretion, based on discussions with the Firm, tax advisers and the auditor and based on the facts and circumstances known at the time. There can be no assurance that any such determination will not change over time. Adjustments made to the net asset value of the Funds in connection with the recognition or unrecognition of contingent tax liabilities may have a material positive or negative effect on certain investors and prospective investors, depending on the circumstances. Counterparty Risk. The Funds expect to establish relationships to obtain financing, derivative intermediation and prime brokerage services that permit the Funds to trade in certain markets or asset classes over time. However, there can be no assurance that the Funds will be able to establish or maintain such relationships. An inability to establish or maintain such relationships could limit the Funds’ investing activities, create losses, preclude the Funds from engaging in certain transactions or prevent the Funds from trading at optimal rates and terms. Moreover, a disruption in the financing, derivative intermediation and prime brokerage services provided by any such relationships could have a significant impact on the Funds’ business due to the Funds’ reliance on such counterparties. The Funds may affect transactions in the “over-the-counter” or “OTC” derivatives markets. The stability and liquidity of OTC derivatives transactions depends in large part on the creditworthiness of the parties to the transactions. In the OTC markets, the Funds enter into a contract directly with dealer counterparties which may expose the Funds to the risk that a counterparty will not settle a transaction in accordance with its terms because of a solvency or liquidity problem with the counterparty. Delays in settlement may also result from disputes over the terms of the contract (whether or not bona fide). In addition, the Funds may have a concentrated risk in a particular counterparty, which may mean that if such counterparty were to become insolvent or have a liquidity problem, losses would be greater than if the Funds had entered into contracts with multiple counterparties. Certain OTC derivative contracts require that the Funds post collateral. If there is a default by a counterparty, the Funds under most normal circumstances will have contractual remedies pursuant to the agreements related to the transaction. However, exercising such contractual rights may involve delays or costs which could result in the net asset value of the Funds being less than if the Funds had not entered into the transaction. Furthermore, there is a risk that any of such counterparties could become insolvent and/or the subject of insolvency proceedings. In such case, the recovery of the Funds’ investments from such counterparty or the payment of claims therefore may be significantly delayed and the Funds may recover substantially less than the full value of the investments entrusted to such counterparty. In addition, there are a number of proposed rules that, if they were to go into effect, may impact the laws that apply to insolvency proceeding and may impact whether the Funds may terminate its agreement with an insolvent counterparty. Collateral that the Funds post to counterparties that is not segregated with a third party custodian may not have the benefit of customer-protected “segregation” of such funds. In the event that a counterparty was to become insolvent, the funds may become subject to the risk that it may not receive the return of its collateral or that the collateral may take some time to return. In addition, the Funds may use counterparties located in jurisdictions outside the United States. Such local counterparties usually are subject to laws and regulations in non-U.S. jurisdictions that are designed to protect customers in the event of their insolvency. However, the practical effect of these laws and their application to the Funds’ assets are subject to substantial limitations and uncertainties. Because of the range of possible factual scenarios involving the insolvency of a counterparty and the potentially large number of entities and jurisdictions that may be involved, it is impossible to generalize about the effect of such an insolvency on the Funds and its assets. Investors should assume that the insolvency of any such counterparty would result in significant delays in recovering the Funds’ investments from or the payment of claims therefor by such counterparty and a loss to the Funds, which could be material. Competition; Availability of Investments. Certain markets in which the Funds may invest are extremely competitive for attractive investment opportunities. As a result, there can be no assurance that the Firm will be able to identify or successfully pursue attractive investment opportunities in such environments. Co-Investments with Third Parties. A Fund may co-invest with third parties through joint ventures or other entities. Third-party involvement with an investment may negatively impact the returns of such investment if, for example, the third-party co-venturer has financial difficulties, has economic or business interests or goals that are inconsistent with those of the Fund or is in a position to take (or block) action in a manner contrary to the Fund 's investment objective. In circumstances where such third parties involve a management group, such third parties may enter into compensation arrangements relating to such investments, including incentive compensation arrangements. Such compensation arrangements will reduce the returns to participants in the investments. Brexit. The United Kingdom has notified the European Council of its intention to withdraw from the European Union. The ongoing withdrawal process could cause an extended period of uncertainty and market volatility, not just in the United Kingdom but throughout the European Union, the European Economic Area and globally. It is not possible to ascertain the precise impact these events may have on the Funds or the Investment Manager from an economic, financial or regulatory perspective but any such impact could have material consequences for the Funds. General Economic and Market Conditions. The success of the Funds’ activities will be affected by general economic and market conditions, such as interest rates, availability of credit, credit defaults, inflation rates, economic uncertainty, changes in laws (including laws relating to taxation of the Funds’ investments), trade barriers, currency exchange controls, and national and international political circumstances (including wars, terrorist acts or security operations). These factors may affect the level and volatility of the prices and the liquidity of the Funds’ investments. Volatility or illiquidity could impair the Funds’ profitability or result in losses. The Funds may maintain substantial trading positions that can be adversely affected by the level of volatility in the financial markets. Risks of Investments in Physical Assets. The Funds will invest in hard assets such as rail cars, aircraft and related assets. These investments are subject to risks that include, among others, destruction, loss, terrorist attacks, industry-specific regulation (e.g., pollution control regulation), operating failures and labor relations. In addition, the regulation of such assets is extensive and variable, and the Funds’ investments in such assets could be wholly illiquid for long periods of time. Prices of physical assets are affected by factors such as global supply and demand, investors’ expectations with respect to the rate of inflation, currency exchange rates, interest rates, investment and trading activities of hedge funds and commodity funds, and global or regional political, economic or financial events and situations. Markets can be volatile at times, and there may be sharp fluctuations in prices even during periods of rising prices. Infrastructure Risks. Infrastructure assets may be subject to a variety of risks, not all of which can be foreseen or quantified, including: (i) the burdens of ownership of infrastructure; (ii) local, national and international political and economic conditions; (iii) the supply and demand for services from and access to infrastructure; (iv) the financial condition of users and suppliers of infrastructure assets; (v) changes in interest rates and the availability of funds which may render the purchase, sale or refinancing of infrastructure assets difficult or impracticable; (vi) changes in environmental laws and regulations, planning laws and other governmental rules; (vii) changes in energy prices; (viii) changes in fiscal and monetary policies; (ix) under-insured or uninsurable losses, such as force majeure acts and terrorist events and (x) other factors which are beyond the reasonable control of the Funds. Many of the foregoing factors could cause fluctuations in usage, expenses and revenues, causing the value of investments to decline and a material adverse effect on the Funds’ investments. In acquiring or attempting to acquire infrastructure investments, the Funds may need to participate in competitive bidding and may incur significant expenses in doing so. Many infrastructure investments are subject to substantial governmental regulation that could negatively impact the investment. Hazardous Materials. One or more of the Funds’ rail car or aircraft investments may transport hazardous materials. An accidental release of hazardous materials could result in significant loss of lives and extensive property damage. The associated costs could have an adverse effect on the Funds’ operating results, financial condition or liquidity. Labor Unions. Many railroad and airline employees and rail car/aircraft manufacturer employees are union-represented and work under collective bargaining agreements with various labor organizations. If these union-represented employees were to engage in a strike, work stoppage or other slowdown, or other employees were to become unionized or their terms and conditions in future labor agreements were renegotiated, one or more of the Funds’ rail car or airline investments could experience significant disruption, which could impact the flow of new product. Governmental and Industry Regulations of Rail Car and Aircraft Operations. The Funds’ respective rail car and aircraft operations are subject to federal, state, administrative and industry laws and regulations. The Funds could incur significant costs, fines and penalties as a result of any allegations or findings to the effect that the Funds has violated or are strictly liable under these laws or regulations. Catastrophic Loss. The operation of any rail car or aircraft carries with it an inherent risk of catastrophe, mechanical failure, collision, and property loss. In the course of the Funds’ operations, spills or other environmental mishaps, cargo loss or damage, business interruption due to political developments, as well as labor disputes, strikes and adverse weather conditions, could result in a loss of revenues or increased liabilities and costs. Collisions, cargo leaks or explosions, environmental mishaps, or other accidents can cause serious bodily injury, death, and extensive property damage, particularly when such accidents occur in heavily populated areas. Additionally, the Funds’ operations may be affected from time to time by natural disasters such as earthquakes, volcanoes, floods, hurricanes or other storms. The occurrence of a major natural disaster could have a material adverse effect on our operations and financial condition. The Funds maintain umbrella insurance that is consistent with industry practice against the accident-related risks involved in the conduct of our business and business interruption due to natural disaster. However, this insurance is subject to a number of limitations on coverage, depending on the nature of the risk insured against. This insurance may not be sufficient to cover certain damages and may not continue to be available at commercially reasonable rates. In addition, the Funds are subject to the risk that one or more of its insurers may become insolvent and would be unable to pay a claim that may be made in the future. Even with insurance, if any catastrophic interruption of service occurs, a railroad or airline may not be able to restore service without a significant interruption to operations which could have an adverse effect on the use of the rail cars or aircraft. In addition, adverse events directly and indirectly attributable to the Funds, including such things as derailments, accidents, discharge of toxic or hazardous materials, or other like occurrences in the industry, may result in increases in the Funds’ insurance premiums and could result in limitations to the coverage under the Funds’ existing policies. Lack of Insurance on Cash and Other Liquid Assets. The cash and other liquid assets of the Funds are not insured by any government or private insurer except to the extent portions of their respective portfolios may be deposited in bank accounts insured by the United States Federal Deposit Insurance Corporation and such deposits are subject to such insurance coverage (which, in any event, is limited in amount). Therefore, in the event of the insolvency of a depository or custodian, the Funds may be unable to recover all of their funds. Leasing Risks. The Funds’ investments may include various types of leases, including, without limitation, rail car and airplane leases. If a lessee goes bankrupt, its bankruptcy trustee may repudiate a lease and return the equipment or other property to the lessor. Other risks may arise out of the lessor-lessee relationship, including, without limitation, the lessee’s failure to properly maintain the asset that is the subject of the lease. Long-Term Investments. The success of the Funds’ long-term investment strategies depends upon the Firm’s ability to identify and purchase investments that are undervalued and hold such investments to maximize value on a long-term basis. In pursuing any long- term strategy, the Funds may forego value in the short-term or temporary investments in order to be able to avail the Funds of additional and/or longer-term opportunities in the future. Consequently, the Funds may not capture maximum available value in the short- term. Since the Funds may only make a limited number of investments and since many of the investments may involve a high degree of risk, poor performance by a few of the investments could severely affect the total return to investors. Investment Expenses. The investment expenses associated with the Funds contemplated investment program (including, but not limited to, interest expense incurred in connection with the Funds’ borrowings, as well as the costs of negotiating and documenting individual loan documents and leases), as well as other Fund fees, may, in the aggregate, constitute a high percentage relative to other investment entities. Investment costs associated with financing and leasing, particularly in international or multi-jurisdictional transactions, may be particularly high, since each separate transaction is likely to require individual and negotiated transaction documentation. The Funds will bear these costs regardless of their profitability. Risks Related to Leverage and Borrowing. Leverage for Investment Purposes. The use of leverage with respect to the Funds and special purpose vehicles (each a “SPV”) will allow the Funds and SPVs to make additional investments, thereby increasing their exposure to assets, such that their total assets may be greater than their capital. However, leverage will also magnify the volatility of changes in the value of the Funds’ and the SPVs’ portfolios. The effect of the use of leverage by the Funds and the SPVs in a market that moves adversely to their investments could result in substantial losses to the Funds and the SPVs, which would be greater than if the Funds and the SPVs were not leveraged. While leverage presents opportunities for increasing the Funds’ total return, it has the effect of potentially increasing losses as well. Accordingly, any event which adversely affects the value of an investment by the Funds or an SPV would be magnified to the extent an investment is leveraged. The cumulative effect of the use of leverage by the Funds and the SPVs in a market that moves adversely to such Funds’ and the SPVs’ investments could result in a substantial loss which would be greater than if the Funds and the SPVs were not leveraged. Borrowing for Cash Management and other Purposes. The Funds also have the authority to borrow for cash management and other purposes, such as to satisfy withdrawal requests. The rates at and terms on which the Funds can borrow will affect the operating results of the Funds. Collateral. The instruments and borrowings utilized by the Funds and the SPVs to leverage investments may be collateralized by all or a portion of the Funds’ and the SPVs portfolios. Accordingly, the Funds and/or the SPVs may pledge the investments in order to borrow or otherwise obtain leverage for investment or other purposes. Should the investments pledged to brokers to secure the Funds’ and/or the SPVs’ margin accounts decline in value, the Funds and/or the SPVs could be subject to a “margin call”, pursuant to which the Funds and/or the SPVs must either deposit additional funds or investments with the broker or suffer mandatory liquidation of the pledged investments to compensate for the decline in value. The banks and dealers that provide financing to the Funds and/or the SPVs can apply essentially discretionary margin, “haircut”, financing and collateral valuation policies. Changes by counterparties in any of the foregoing may result in large margin calls, loss of financing and forced liquidations of positions at disadvantageous prices. Lenders that provide other types of asset-based or secured financing to the Funds and/or the SPVs may have similar rights. There can be no assurance that the Funds and/or the SPVs will be able to secure or maintain adequate financing. Costs. Borrowings will be subject to interest, transaction and other costs, and other types of leverage also involve transaction and other costs. Any such costs may or may not be recovered by the return on the Funds’ and/or the SPVs’ portfolios. Diversification and Concentration. The Firm is expected to select investments that are concentrated in rail cars, airplanes, and other productive real assets. This limited diversification may result in the concentration of risk, which, in turn, could expose the Funds to losses disproportionate to market movements in general if there are disproportionately greater adverse price movements in such investments. Hedging Transactions. The Funds may utilize investments for risk management purposes in order to: (i) protect against possible changes in the market value of the Funds’ investment portfolio resulting from fluctuations in the markets and changes in interest rates;(ii) protect the Funds’ unrealized gains in the value of its investment portfolio; (iii) facilitate the sale of any investments; (iv) enhance or preserve returns, spreads or gains on any investment in the Funds’ portfolios; (v) hedge against a directional trade; (vi) hedge the interest rate, credit or currency exchange rate on any of the Funds’ investments; (vii) protect against any increase in the price of any investments the Funds anticipate purchasing at a later date; or (viii) act for any other reason that the Firm deems appropriate. The Funds will not be required to hedge any particular risk in connection with a particular transaction or its portfolio generally. The Firm may be unable to anticipate the occurrence of a particular risk and, therefore, may be unable to attempt to hedge against it. While the Funds may enter into hedging transactions to seek to reduce risk, such transactions may result in a poorer overall performance for the Funds than if it had not engaged in any such hedging transaction. Moreover, the portfolio will always be exposed to certain risks that cannot be hedged. Discretion of the Firm; New Strategies and Techniques. While the Firm generally will seek to employ the representative investment strategies and techniques discussed herein, the Firm (subject to the policies and control of the General Partners) has considerable discretion in the types of investments the Funds may invest and has the right to modify the investment strategies and techniques of the Funds without the consent of the investors. New investment strategies and techniques may not be thoroughly tested in the market before being employed and may have operational or theoretical shortcomings which could result in unsuccessful trades and, ultimately, losses to the Funds. In addition, any new investment strategy or technique developed by the Funds may be more speculative than earlier investment strategies and techniques and may involve material and as-yet- unanticipated risks that could increase the risk of an investment in the Funds. Master Limited Partnerships. An investment in a master limited partnership (an “MLP”) unit involves risks that differ from those associated with investments in similar equity securities, such as common stock of a corporation. Holders of MLP units usually have the rights typically afforded to limited partners in a limited partnership, and as such have limited control and voting rights on matters affecting the partnership. In addition, there is the risk that an MLP could be, contrary to its intention, taxed as a corporation, resulting in decreased returns from such MLP. Further, conflicts of interest may exist between common unit holders, subordinated unit holders and the general partner of the MLP, including those arising from incentive distribution payments. Convertible Securities. A convertible security may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument. If a convertible security held by the Funds is called for redemption, the Funds will be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third party. Any of these actions could have an adverse effect on the Funds’ ability to achieve its investment objective.
Commodities.
Factors affecting Commodities Prices. The values of commodities which underlie the commodity futures contracts and other types of financial instruments are generally affected by, among other factors, the cost of producing commodities, changes in consumer demand for commodities, the hedging and trading strategies of producers and consumers of commodities, speculative trading in commodities by commodity pools and other market participants, disruptions in commodity supply, weather and climate conditions, changes in interest rates, rates of inflation, currency devaluations and revaluations, embargoes, tariffs, regulatory developments, governmental, agricultural, trade, fiscal, monetary and exchange control programs and policies, political and other global events and global economic factors. In addition, governments from time to time intervene, directly and by regulation, in certain markets, often with the intent to influence prices directly. The effects of governmental intervention may be particularly significant at certain times in certain markets and this intervention may cause these markets to move rapidly. The Funds and the Investment Manager have no control over the factors that affect the price of commodities. Accordingly, the value of the Fund’s investments could change substantially and in a rapid and unpredictable manner. Cash Commodities. Contracts governing the purchase and sale of specific physical commodities (known as "cash commodities") for immediate or deferred delivery may differ from each other with respect to terms such as quantity, grade, mode of shipment, terms of payment, penalties and risk of loss. There is no limit on daily price movements of cash commodities and banks, brokerage firms, and dealers in cash commodities are not required to continue to make markets in any commodity. Lastly, the CFTC does not comprehensively regulate cash transactions, which are subject to the risk of the foregoing entities' failure, inability or refusal to perform with respect to such contract. Debt Securities. Debt securities of all types of issuers may have speculative characteristics, regardless of whether they are rated. The issuers of such instruments (including sovereign issuers) may face significant on-going uncertainties and exposure to adverse conditions that may undermine the issuer’s ability to make timely payment of interest and principal in accordance with the terms of the obligations. Interest Rate Risk. Changes in interest rates can affect the value of the Funds’ investments in fixed-income instruments. Increases in interest rates may cause the value of the Funds’ debt investments to decline. The Funds may experience increased interest rate risk to the extent it invests, if at all, in lower-rated instruments, debt instruments with longer maturities, debt instruments paying no interest (such as zero-coupon debt instruments) or debt instruments paying non-cash interest in the form of other debt instruments. Future Funding Obligations. The Funds may from time to time incur funding obligations that may arise in the future in connection with an investment. For example, the Firm may cause the Funds to purchase from a lender a revolving credit facility that has not yet been fully drawn. If the borrower subsequently draws down on the facility, the Funds’ would be obligated to fund the amounts due. If the Funds are unable to pay its obligations when due, the Funds could face significant penalties that could materially adversely affect its returns. The Funds may also enter into agreements pursuant to which it agrees to assume responsibility for default risk presented by a third party, and may, on the other hand, enter into agreements through which third parties offer default protection to the Funds. High-Yield. Bonds or other fixed-income securities that are “higher yielding” (including non-investment grade) debt securities are generally not exchange traded and, as a result, these securities trade in the over-the-counter marketplace, which is less transparent and has wider bid/ask spreads than the exchange-traded marketplace. High-yield securities face on-going uncertainties and exposure to adverse business, financial or economic conditions, which could lead to the issuer’s inability to meet timely interest and principal payments. High-yield securities are generally more volatile and may or may not be subordinated to certain other outstanding securities and obligations of the issuer, which may be secured by substantially all of the issuer’s assets. High-yield securities may also not be protected by financial covenants or limitations on additional indebtedness. The market values of certain of these lower-rated and unrated debt securities tend to reflect individual corporate developments to a greater extent than do higher-rated securities, which react primarily to fluctuations in the general level of interest rates, and tend to be more sensitive to economic conditions than are higher-rated securities. Companies that issue such securities may be highly leveraged and may not have available to them more traditional methods of financing. In addition, the Funds may invest in bonds of issuers that do not have publicly traded equity securities, making it more difficult to hedge the risks associated with such investments. The Funds may invest in obligations of issuers that are generally trading at significantly higher yields than had been historically typical of the applicable issuer’s obligations. Such investments may include debt obligations that have a heightened probability of being in covenant or payment default in the future or that are currently in default and are generally considered speculative. The repayment of defaulted obligations is subject to significant uncertainties. Defaulted obligations might be repaid only after lengthy workout or bankruptcy proceedings, during which the issuer might not make any interest or other payments. Typically, such workout or bankruptcy proceedings result only in partial recovery of cash payments or an exchange of the defaulted security for other debt or equity securities of the issuer or its affiliates, which may in turn be illiquid or speculative. Corporate Debt. Bonds, notes and debentures issued by corporations may pay fixed, variable or floating rates of interest, and may include zero-coupon obligations. Corporate debt instruments may be subject to credit ratings downgrades. Other instruments may have the lowest quality ratings or may be unrated. In addition, the Funds may be paid interest in kind in connection with its investments in corporate debt and related financial instruments (e.g., the principal owed to the Funds in connection with a debt investment may be increased by the amount of interest due on such debt investment). Such investments may experience greater market value volatility than debt obligations that provide for regular payments of interest in cash and, in the event of a default, the Funds may experience substantial losses. Mezzanine Debt. Mezzanine debt is typically junior to the obligations of a company to senior creditors, trade creditors and employees. The ability of the Funds to influence a company’s affairs, especially during periods of financial distress or following an insolvency, will be substantially less than that of senior creditors. Mezzanine debt instruments are often issued in connection with leveraged acquisitions or recapitalizations in which the issuers incur a substantially higher amount of indebtedness than the level at which they had previously operated. Default rates for mezzanine debt instruments have historically been higher than for investment-grade instruments. In the event of the insolvency of a portfolio company of the Funds or similar event, the Funds’ debt investment therein will be subject to fraudulent conveyance, subordination and preference laws. Stressed Debt. Stressed issuers are issuers that are not yet deemed distressed or bankrupt and whose debt securities are trading at a discount to par, but not yet at distressed levels. An example would be an issuer that is in technical default of its credit agreement, or undergoing strategic or operational changes, which results in market pricing uncertainty. The market prices of stressed and distressed instruments are highly volatile, and the spread between the bid and the ask prices of such instruments is often unusually wide. Equitable Subordination. Under common law principles that in some cases form the basis for lender liability claims, if a lender (i) intentionally takes an action that results in the undercapitalization of a borrower or issuer to the detriment of other creditors of such borrower or issuer, (ii) engages in other inequitable conduct to the detriment of such other creditors, (iii) engages in fraud with respect to, or makes misrepresentations to, such other creditors or (iv) uses its influence as a stockholder to dominate or control a borrower or issuer to the detriment of other creditors of such borrower or issuer, a court may elect to subordinate the claim of the offending lender or bondholder to the claims of the disadvantaged creditor or creditors (a remedy called "equitable subordination"). If the Funds engage in such conduct, the Funds may be subject to claims from creditors of an obligor that debt held by the Funds should be equitably subordinated. Equity Securities Generally. The value of equity securities of public and private, listed and unlisted companies and equity derivatives generally varies with the performance of the issuer and movements in the equity markets. As a result, the Funds may suffer losses if it invests in equity instruments of issuers whose performance diverges from the Firm’s expectations or if equity markets generally move in a single direction and the Funds have not hedged against such a general move. The Funds also may be exposed to risks that issuers will not fulfill contractual obligations such as, in the case of convertible securities or private placements, delivering marketable common stock upon conversions of convertible securities and registering restricted securities for public resale.
Liquidity Risks; Illiquidity of Investments. The Funds will invest a significant amount
of their capital in securities or other assets for which no, or only a limited, market exists or that are subject to legal or other restrictions on transfer. The market prices, if any, for such assets tend to be volatile, and may fluctuate due to a variety of factors that are inherently difficult to predict, including, but not limited to, changes in interest rates, prevailing credit spreads, general economic conditions, financial market conditions, domestic or international economic or political events, developments or trends in any particular industry, and the financing condition of the obligors on the Funds' assets. Accordingly, the Funds may not be able to sell assets when the Funds desire to do so or to realize what the General Partner perceives to be the fair value of their assets in the event of a sale. The sale of illiquid assets and restricted securities often requires more time and the incurrence of significant selling expense by the Funds. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. In addition, in times of extreme market disruption, there may be no market at all for one or more of the asset classes held by the Funds, potentially resulting in the inability of the Funds to dispose of their assets for an indefinite period of time.
Private Equity Investments.
Risk of Early Stage Companies. Investments in the private equity of companies at an early stage of development involves a high degree of business and financial risk. Early- stage companies with little or no operating history may require substantial additional capital to support expansion or to achieve or maintain a competitive position, may produce substantial variations in operating results from period to period or may operate at a loss. Such companies may face intense competition, including competition from companies with greater financial resources, more extensive development, better marketing and service capabilities and a larger number of qualified management and technical personnel. Such risks may adversely affect the performance of such investments and result in substantial losses. Control Issues. Although the Investment Manager may seek protective provisions, including, possibly, board representation, in connection with certain of its private equity investments, to the extent the Funds take minority positions in companies in which they invest, the Investment Manager may not be in a position to exercise control over the management of such companies, and, accordingly, may have a limited ability to protect its position in such companies. Highly-Leveraged Companies. Investments in private equity of highly-leveraged companies involve a high degree of risk. The use of leverage may increase the exposure of such companies to adverse economic factors such as downturns in the economy or deterioration in the conditions of such companies or their respective industries. In the event any such company cannot generate adequate cash flow to meet debt service, the Funds may suffer a partial or total loss of capital invested in the company, which, depending on the size of the Funds' investments, could adversely affect the return on the capital of the Funds. Derivative Instruments. Certain swaps, options and other derivative instruments may be subject to various types of risks, including but not limited to market risk, liquidity risk, credit risk, legal risk and operations risk. Derivative instruments traded over-the-counter may not have an authoritative source of valuation and the models used to value such derivatives are subject to change. Special risks may apply in the future that are not presently contemplated. The regulatory and tax environment for derivative instruments in which the Funds may participate is evolving, and changes in the regulation or taxation of such investments may have a material adverse effect on the Funds. Derivatives Regulation. Since the introduction of the Dodd-Frank Act in 2010, the CFTC has promulgated many final rules related to derivatives and such regulations may negatively affect the Funds. Parties that act as dealers in swaps, for example, are subject to extensive business conduct standards, additional “know your counterparty” obligations, recordkeeping, reporting, portfolio reconciliation, documentation standards and capital requirements and, when regulations are finalized, will become subject to margin requirements. Similar rules related to security-based swaps will soon be published. Requirements such as these will raise the costs of entering into derivative transactions, and these increased costs will likely be passed on to the Funds. The new rules also add additional operational and technological burdens on the Funds. Currently, with respect to swaps, the Funds must engage in portfolio reconciliation, recordkeeping, reporting and other transaction level obligations, which increase the compliance burdens and costs to the Funds. These compliance obligations require certain training of employees and technology, and there are operational risks as the Funds implement procedures to comply with many of these additional obligations. Certain swap transactions have become (or will become) subject to anonymous “real time reporting”, meaning that transactions entered into by the Funds will become visible to the market in ways that may harm the Funds’ ability to enter into additional transactions at comparable prices or could enable competitors to “front run” or replicate the Funds’ strategies. In addition, certain swap transactions have become (or will become) subject to mandatory trading on regulated trading venues such as swap execution facilities (“SEFs”), which will require the Funds to subject themselves to regulation by these venues and subject the Funds to the jurisdiction of the CFTC. It is not clear whether these trading venues will benefit or impede liquidity, or how they will fare in times of market stress. Trading on these trading venues may increase the pricing discrepancy between assets and their hedges as products may not be able to be executed simultaneously, therefore increasing basis risk. It may also become relatively expensive for the Funds to obtain tailored swap products to hedge particular risks in its portfolio due to higher collateral requirements on bilateral transactions as a result of the new regulations. The SEC still is at a nascent stage for implementing rules related to security-based swaps. It is possible that security-based swaps will be subject to different rules and regulations than swaps. Since the division of “swaps” (regulated by the CFTC) and “security-based swaps” (regulated by the SEC) is a regulatory distinction rather than a product distinction, substantively similar products may have significantly different regulatory treatment. This may mean that the operational complexities of trading various derivative instruments are increased. Overall, new regulations may also render certain strategies in which the Funds might otherwise engage impossible or so costly that they will no longer be economical to implement. The impact of the Dodd-Frank Act or comparable regulations in other jurisdictions on the Funds is uncertain, and it is unclear how the over-the-counter derivatives markets will adapt to this new regulatory regime or any additional regulation in the future. Swaps. Swap agreements and options on swap agreements may increase or decrease the holder’s exposure to, for example, equity securities, long-term or short-term interest rates, non-U.S. currency and are known by a variety of names. Swap transactions may be highly illiquid and may increase or decrease the volatility of the Funds’ portfolios. Moreover, the Funds will also bear the risk of loss related to swap agreements, for example, for breaches of such agreements or the failure of the Funds to post or maintain required collateral. It is possible that developments in the swap markets, including potential government regulation, could adversely affect the Funds’ ability to terminate swap transactions or to realize amounts to be received under such transactions. Call Options. The seller (writer) of a call option which is covered (i.e., the writer holds the underlying investment) assumes the risk of a decline in the market price of the underlying investment below the purchase price of the underlying investment less the premium received, and gives up the opportunity for gain on the underlying investment above the exercise price of the option. The seller of an uncovered call option assumes the risk of a theoretically unlimited increase in the market price of the underlying investment above the exercise price of the option. The investments necessary to satisfy the exercise of an uncovered call option may be unavailable for purchase, except at much higher prices, thereby reducing or eliminating the value of the premium. Purchasing investments to cover the exercise of an uncovered call option can cause the price of the investments to increase, thereby exacerbating the loss. The buyer of a call option assumes the risk of losing its entire premium investment in the call option. Put Options. The seller (writer) of a put option which is covered (i.e., the writer has a short position in the underlying investment) assumes the risk of an increase in the market price of the underlying investment above the sales price (in establishing the short position) please register to get more info

Neither ITE nor any of its management persons have been involved in any legal or disciplinary events that are material to a Fund, investor, prospective fund or prospective investor’s evaluation of the Firm’s advisory business or the integrity of its management. please register to get more info

A. Neither ITE nor any of its management persons are registered, or have an application pending to register, as a broker-dealer or a registered representative of a broker-dealer. B. Neither ITE nor any of its management persons are registered, or have an application pending to register, as a futures commission merchant, commodity pool operator, a commodity trading advisor, or an associated person of the foregoing entities. C. ITE, the General Partners and their respective affiliates will be subject, and the Funds will be exposed, to a number of actual and potential conflicts of interest. Any such conflict of interest could have a material adverse effect on the Funds and the investors' investments therein. However, the existence of an actual or potential conflict of interest does not mean that it will be acted upon to the detriment of the Funds. When a conflict of interest arises, ITE will endeavor to ensure that the conflict is resolved fairly and in an equitable manner that is consistent with its fiduciary duties to the Funds. ITE has in place policies and procedures that it believes are reasonably designed to identify and resolve actual and potential conflicts of interest. Unless the context clearly indicates otherwise, references in this section to conflicts of interest that may apply to ITE should be understood to apply to ITE and its affiliates.

Investors and prospective investors should understand that ITE's, the General Partners’ and the Funds’ businesses change over time, and ITE, the General Partners and their respective affiliates may be subject, and the Fund may be exposed, to new or additional conflicts of interest. There can be no assurance that this Brochure addresses or anticipates every possible current or future conflict of interest that may arise or that is or may be detrimental to the Funds or the investors. A prospective investor should consult with its own advisers regarding the possible implications of the conflicts of interest described in the relevant Fund’s Offering Documents on its investment in a Fund.

Other Activities of ITE and its Affiliates. Conflicts of interest may arise from the fact that ITE, the General Partner and their respective affiliates may in the future provide investment management services to clients other than the Fund, including, without limitation, investment funds, separately managed accounts, proprietary accounts and other investment vehicles (collectively, "Other Accounts", and together with the Fund, the "Accounts" and each, an "Account"). The Fund will not typically have an interest in any Other Accounts. Other Accounts may have investment objectives, programs, strategies and positions that are similar to or may conflict with those of the Fund, or may compete with or have interests adverse to the Fund. Such conflicts could affect the prices and availability of investments in which the Fund invests. Even if an Other Account has investment objectives, programs or strategies that are similar to those of the Fund, ITE may give advice or take action with respect to the investments held by, and transactions of, the Other Accounts that may differ from the advice given or the timing or nature of any action taken with respect to the investments held by, and transactions of, the Fund for a variety of reasons, including, without limitation, differences between the investment strategy, financing terms, regulatory treatment and tax treatment of the Other Accounts and the Fund. As a result, the Fund and an Other Account may have substantially different portfolios and investment returns. Conflicts of interest may also arise when ITE makes decisions on behalf of the Fund with respect to matters where the interests of ITE or one or more Other Accounts differs from the interests of the Fund. ITE will seek to allocate investments among the Fund and the Other Accounts in a fair and equitable manner.

Lack of Exclusivity. ITE, its affiliates and personnel will devote as much of their time to the activities of the Fund as they deem necessary and appropriate. ITE, its affiliates and personnel will not be restricted from forming Other Accounts, from entering into other investment advisory relationships or from engaging in other business activities, even if such activities may be in competition with the Fund and/or may involve substantial time and resources of ITE, its affiliates or personnel.

With respect to the Rail Funds, given the relatively small nature of the rail car industry, the Principals have, and may in the future, provide advisory services to companies that are in the rail car industry and may or may not compete with portfolio companies held by the Fund. These activities could be viewed as creating a conflict of interest in that the time and effort of ITE, its affiliates and personnel will not be devoted exclusively to the business of the Fund but will be allocated between the business of the Fund and the management of Other Accounts and businesses.

From time to time, employees of ITE may serve as directors or advisory board members of certain portfolio companies or other entities. In connection with such services, such persons may receive directors' fees or other similar compensation attributable to such employees' services.
Investments by Senior Management and Key Employees in the Fund and Other
Accounts. Subject to applicable regulatory restrictions and ITE's personal trading policy, senior management and key employees of ITE may choose to personally invest, directly and/or indirectly, in the Fund and/or the Other Accounts. Such investors may be in possession of information relating to the Fund that is not available to other investors and prospective investors. Senior management and key employees are not required to keep any minimum investment in the Fund and may invest in Other Accounts. It is expected that, if such investments are made, the size and nature of these investments will change over time without notice to the investors. Investments by senior management and key employees in the Fund and/or Other Accounts could incentivize senior management and key employees to increase or decrease the risk profile of the Fund. Investments by Investment Manager Personnel. The Code of Ethics of ITE places restrictions on personal trades by employees, including that they disclose their personal investment holdings and transactions to ITE on a periodic basis, and requires that employees pre-clear certain types of personal investments transactions. Subject to internal compliance policies and approval procedures, partners and employees of ITE may engage, from time to time, in personal trading of investments, including investments in which the Fund may invest and/or investments in companies that have a substantial relationship to the Fund. ITE, its affiliates and its employees may give advice or take action for their own accounts that may differ from, conflict with or be adverse to advice given or action taken for the Fund. These activities may adversely affect the prices and availability of other investments held by or potentially considered for purchase by the Fund.

Allocations of Investment Opportunities. ITE’s general policy is to allocate investment opportunities to the Fund and to any Other Accounts on a fair and equitable basis, to the extent practical and in accordance with the Fund's or Other Accounts' applicable investment strategies, over a period of time. ITE's allocation policies and procedures are subject to change without notice to accommodate specific facts and circumstances.

When allocating investment opportunities among the Fund and Other Accounts, ITE will take into account several factors, including but not limited to, the following: (i) available capital; (ii) available capacity; (iii) account investment strategies, objective, and time horizons; (iv) Account-imposed investment guidelines/restrictions; (v) avoidance of excessive transaction costs relative to the size of an Account's participation (vi) diversification considerations and other market risk factors; (vii) existing portfolio composition; volatility and leverage considerations; (viii) liquidity considerations at the time of investment and on a going-forward basis; (ix) Target Ratio; (x) need to rebalance positions held in an investment due to capital inflows or withdrawals; (xi) relevant exposure to market trends; (xii) terms, structure and availability of financing; (xiii) diligence and negotiation in respect of an investment; (xiv) need to re-size risk in an Account's portfolio; (xv) legal and regulatory restrictions; and (xvi) tax considerations,

ITE, in its sole discretion, may make non-pro rata allocations among the Fund and the Other Accounts based on, among other things, the factors listed above, together with any factors it deems to be relevant.

Cross Trades. ITE may determine that it would be in the best interests of the Funds to transfer an investment from one Account to another (each such transfer, a "Cross Trade") for a variety of reasons, including, without limitation, tax purposes, liquidity purposes, to rebalance the portfolios of the Accounts, or to reduce transaction costs that may arise in an open market transaction. Please see Item 11.B below for further detail. Side Letter Agreements. The Fund, and in certain cases ITE, will have the discretion to waive or modify the application of, or grant special or more favorable rights with respect to, any provision of the Fund’s Offering Documents to the extent permitted by applicable law. To effect such waivers or modifications or the grant of any special or more favorable rights, the Fund may create additional classes for certain investors that provide for, among other things, (i) greater transparency into the Fund's portfolio, (ii) different or more favorable withdrawal rights, such as more frequent withdrawals or shorter withdrawal notice periods, (iii) greater information than may be provided to other Investors, (iv) different fee or incentive compensation terms, (v) more favorable transfer rights and (vi) key-person notifications. Certain such waivers, modifications or grants of special or more favorable rights may also be affected by the Fund, and, in certain cases, ITE, through agreements ("Side Letter Agreements"). The General Partner, in its sole discretion, may aggregate the amount of any capital commitments by investors that are clients of, or otherwise managed or advised by, the same advisor for the purposes of determining preferential terms, including, without limitation, preferential fees agreed to in Side Letter Agreements. The Fund, and in certain cases, ITE may enter into Side Letter Agreements, including, without limitation Side Letter Agreements with a Limited Partner that is a member, partner, affiliate or employee of the General Partner or ITE, a member of the immediate family of such a person, a trust or other entity for the benefit of such a person, or a strategic partner of the General Partner of ITE. Although certain investors may invest in the Fund with different material terms, the Fund and ITE generally will only offer such terms if they believe other investors of the Fund will not be materially disadvantaged.

ITE Could Have Different Compensation Arrangements with Other Accounts. ITE could be subject to a conflict of interest because varying compensation arrangements among the Fund and Other Accounts could incentivize ITE to manage the Fund and such Other Accounts differently.

Valuation. The Fund's assets and liabilities are valued in accordance with the Firm’s Valuation Policy. In making valuation determinations, ITE may be deemed subject to a conflict of interest, especially with respect to illiquid investments, as the valuation of such assets and liabilities affects its compensation and the compensation of the General Partner. There is no guarantee that the value determined with respect to a particular asset or liability by ITE will represent the value that will be realized by the Fund on the eventual disposition of the related investment or that would, in fact, be realized upon an immediate disposition of the investment.

Incentive Allocation. The General Partner will receive the performance-based Incentive Allocation in connection with the management of the Fund. The Incentive Allocation may give rise to potential conflicts of interest, including, but not limited to, the following:

Allocation of Investment Opportunities. The Incentive Allocation may create an incentive for ITE, an affiliate of the General Partner, to direct the best investment ideas to, or to allocate or sequence trades in favor of, (i) Accounts with performance compensation arrangements over Accounts that are not charged, or from which the General Partner or ITE will not receive (e.g., because the Account has a positive loss recovery account), performance compensation, and (ii) Accounts from which the General Partner or ITE will receive a greater performance compensation over Accounts from which the General Partner or ITE will receive lesser performance compensation. Valuation. The Incentive Allocation may create an incentive for ITE to provide biased valuations, especially with respect to illiquid investments. Risk. The Incentive Allocation may create an incentive for ITE to make investments that are riskier or more speculative than would be the case if a performance-based compensation arrangement were not in effect. Timing and Realization of Investments. The Incentive Allocation may create an incentive for ITE to time investments, and the realization of investments, so as to maximize the Incentive Allocation rather than the return of the Fund.

Service Providers. The fund administrator, prime brokers and other Service Providers may provide services to other vehicles with similar investment programs and, accordingly, may have conflicts of interest. In addition, subject to applicable law, any of the Service Providers may deal, as principal or agent, with the Fund; provided that such dealings are on normal commercial terms negotiated on an arm's-length basis.

Transactions with Portfolio Companies. Principals have, and may in the future, enter into transactions with portfolio companies of the ITE Rail Fund L.P. In particular, James Unger owns a building complex that previously had been leased to a portfolio company of ITE Rail Fund L.P. In connection with such transactions, the Principals, senior management and key employees of ITE may receive compensation and other perquisites that are not shared with the Fund or the investors and that do not offset the Management Fees. Any such compensation or other perquisites will be retained by the Principals and will be in addition to the Management Fee and the Incentive Allocation.

There can be no assurance that such transactions will benefit ITE Rail Fund L.P.’s portfolio companies. To the extent practicable, the General Partner will seek to ensure that any such arrangements will contain terms at least as favorable to the portfolio company as are generally obtainable on an arm's-length basis from unrelated third parties. The General Partner may from time to time seek approval from the Advisory Committee described above for any such transactions, but it is not required to do so.

Employees of Portfolio Companies. Employees of ITE may serve as directors and/or officers of portfolio companies of the Fund or may otherwise be employed by portfolio companies of the Fund. Accordingly, such employees may have a conflict where their fiduciary duty to the portfolio company may conflict with their fiduciary duty to the Fund. In such circumstances, any such employee may act in accordance with his or her fiduciary duty to the portfolio company rather than any fiduciary duty such person may have to the Fund. In addition, certain directors, officers or employees of portfolio companies may (i) be co- investors with the Fund or Other Accounts; (ii) have affiliations with third parties who provide professional or other services to the Fund's other portfolio companies, the Fund or Other Accounts, or (iii) have personal or familial relationships or affiliations with the principals and employees of ITE. In instances where ITE, on behalf of the Fund, appoints or retains (or influences the appointment or retention of) such directors, officers or employees on behalf of portfolio companies, ITE will make determinations with respect to the qualifications and appropriateness of such persons in its sole discretion. Potential employees of portfolio companies have included, and may in the future include, individuals with personal and familial relationships with employees of ITE. Given the relationships among the ITE employees and any such personnel, conflicts may arise in connection with any such appointment and ongoing monitoring of those officers and the portfolio companies.

There may be instances where an individual may be suitable for engagement by both ITE and a portfolio company. If the individual is hired by ITE, the costs and expenses associated with such personnel would be borne by ITE, and if the individual is hired by the portfolio company, the costs and expenses associated with such personnel would be borne by the appropriate Fund. Accordingly, there will be a conflict for ITE when determining whether to hire an individual for ITE or to recommend such individual for employment by a portfolio company. In addition, there may be circumstances where personnel of ITE become employees of portfolio companies when it is determined by ITE that their skill set would be better utilized by the portfolio company.

From time to time, employees of a portfolio company also may provide assistance and advice to ITE unrelated to the portfolio company. ITE is not always aware of conflicts arising in connection with employees and members of portfolio companies. Whenever ITE is aware of such conflicts, however, it will use reasonable efforts to ensure that such conflicts are minimized in an appropriate manner to the extent practicable in its good faith discretion. D. ITE does not recommend or select other investment advisers for its Funds. please register to get more info

PERSONAL TRADING
A. The Firm has adopted a written Code of Ethics (the “Code”), which describes ITE’s fiduciary duties and responsibilities to the Funds, requires that ITE’s employees act in the best interests of the Funds to the exclusion of contrary interests, act in good faith and in an ethical manner, mitigate conflicts of interest with the Funds to the extent reasonably possible, and identify and manage conflicts of interest to the extent that they arise. ITE’s employees are also required to comply with applicable provisions of the federal securities laws and make prompt reports to ITE or other appropriate party of any actual or suspected violations of such laws by ITE or its employees.

In addition, the Code sets forth policies and procedures with respect to the personal securities trading activities of ITE’s employees pursuant to Rule 204A-1 of the Adviser’s Act. The Code requires, among other things, employees to report to the Firm all personal trading accounts over which they maintain investment discretion, and to disclose to the Firm all those accounts, if any, that are managed by a third party financial adviser. Employees are required to report all “reportable securities” transactions in such personal trading accounts and provide a summary of securities holdings initially upon hire and on an annual basis thereafter. “Reportable securities” means any security except: (1) direct obligations of the Government of the United States; (2) bankers’ acceptances, bank certificates of deposit, commercial paper and high-quality short-term debt instruments, including repurchase agreements; (3) shares issued by money market funds; (4) shares issued by mutual funds, other than funds advised or underwritten by ITE or an affiliate; (5) shares issued by unit investment trusts that are invested exclusively in one or more open-end registered investment companies, none of which are advised or underwritten by ITE or an affiliate, or (6) shares issued by exchange-traded funds that are structured as open-end funds.

The Code also addresses outside activities of employees, conflicts of interest, policies and procedures concerning the prevention of insider trading, restrictions on the acceptance of significant gifts and the reporting of certain gifts and business entertainment items, and the pre-clearance and reporting of political contributions.

B. The Firm may determine that it may be in the best interests of the Funds to transfer an investment from one Fund account to another (each such transfer, a “Cross Trade”) for a variety of reasons, including, without limitation, tax purposes, liquidity purposes, to rebalance the portfolios of the Fund accounts, or to reduce transaction costs that may arise in an open market transaction. If ITE engages in a Cross Trade, ITE will determine that the trade is in the best interests of both of the Funds involved and take the necessary protective steps to ensure that the transaction is consistent with the duty to obtain best execution for each of those accounts. A cross transaction between two Funds may occur as an “internal cross”, where ITE instructs the Funds’ administrator to book the transaction at the price determined in accordance with ITE’s valuation policies and controls. If ITE effects an “internal cross”, ITE will not receive any fee in connection with the completion of the transaction. Cross Trades present an inherent conflict of interest because ITE represents the interest of the buyer and seller in the same transaction. As a result, the Funds involved in such Cross Trades bear the risk that the price obtained from a Cross Trade may be less favorable than if the trade had been executed in the open market. ITE has in place controls to mitigate and address any conflicts that may arise from Cross Trades. C. In general, neither ITE nor any of its related persons will invest in the same securities that ITE or its related persons recommend to the Funds. Should the Firm consider changing its investment practices, it will adopt policies to address the inherent conflicts that will arise. D. In general, neither ITE nor any of its related persons may recommend securities to the Funds, or buy or sell securities for any Fund accounts, at or about the same time that ITE or any of its related persons buys or sells the same securities for the Firm’s own account or any of its related persons’ accounts. please register to get more info

A. The Firm is responsible for the purchase and sale of any securities for the Funds and the negotiation of any commissions paid on such transactions. To the extent ITE engages in securities transactions, ITE will select brokers on the basis of best execution, taking into consideration various factors, including commission rates, reliability, financial responsibility, strength of the broker and the ability of the broker to efficiently execute transactions, the broker’s facilities, and the broker’s provision or payment of the costs of brokerage and research services that are of benefit to the Funds. 1. ITE does not currently utilize client commission dollars to purchase research or other brokerage services (i.e., soft dollars). If used at all, the Firm will only use soft dollars to pay for research, products and services that fall within the safe harbor as provided under Section 28(e) of the U.S. Securities Exchange Act of 1934, as amended. 2. If ITE engages in securities transactions, the Firm will not consider whether ITE or any of ITE’s related persons receives client referrals from a broker-dealer or third party when selecting or recommending a broker-dealer. 3. ITE does not engage in directed brokerage at this time. B. To the extent ITE engages in securities transactions, the Firm may aggregate purchase or sale orders on behalf of the Funds if, in ITE’s judgment, such aggregation is likely to result in an overall economic benefit to the Funds based on an evaluation that the Funds will benefit by relatively better purchase or sale prices, lower commission expenses or beneficial timing of transactions, or a combination of these and other factors. please register to get more info

A. The Funds’ portfolios are monitored and reviewed on a quarterly basis by the relevant valuation committee. B. More frequent reviews of the Funds’ portfolios may occur on a monthly basis, but only at the request of investors. C. Audited financial statements will be provided to investors in the Funds within 120 days of the end of a Fund’s fiscal year as required by Rule 206(4)-2 under the Adviser’s Act (the “Custody Rule”). In addition, the Firm periodically issues an investor letter to all investors in the Funds. please register to get more info

A. The Firm does not receive an economic benefit from anyone, other than the Funds, for providing investment advice or other advisory services to the Funds. B. From time to time, ITE uses an unaffiliated third-party placement agent for investor referrals. please register to get more info

Under the Custody Rule, an adviser has custody if it acts in any capacity that gives the adviser legal ownership of, or access to, client funds or securities. ITE is be deemed to have custody of the assets of the Fund, because it or one of its affiliates (the General Partner of the Fund) either (i) acts as General Partner of the Fund, with the authority to dispose of funds and securities in the Fund’s accounts or (ii) is deemed to have custody because of its ability to withdraw its fees directly from the Fund. Therefore, ITE is subject to the Custody Rule. ITE will adhere to the applicable Custody Rule provisions with respect to Fund assets in publicly traded and private securities. The Firm’s Chief Operating Officer will be responsible for arranging for annual independent audits of the Fund by a major accounting firm within 120 days of the Fund’s fiscal year end and for obtaining audited financial statements prepared in accordance with GAAP.. ITE will arrange for the delivery of such audited financial statements to investors in the Funds generally within 120 days of the Fund’s fiscal year end. please register to get more info

ITE generally accepts discretionary authority to manage assets and securities on behalf of its Funds. In such instances, ITE accepts discretion through the investment management agreement with the applicable Fund. please register to get more info

A. In the event that the Firm is presented with an opportunity to vote a proxy, the Firm will generally vote in line with company management. The Firm may take into account all relevant factors, as determined by the Firm in its discretion, including, without limitation: ● the impact on the value of the securities or instruments owned by the relevant Fund and the returns on those securities; ● the anticipated associated costs and benefits; ● the continued or increased availability of portfolio information; and ● industry and business practices. However, under circumstances when the Firm believes that company management’s proposal will not maximize value for the Funds, the Firm will generally vote against company management. In such cases where the Firm votes against company management will document in a memorandum: ● The reason for such decision; ● The Firm’s decision in the vote; ● The result of such vote; and ● Provide, upon investor request, the documentation and rationale for voting such proxy. In limited circumstances, the Firm may refrain from voting proxies where the Firm decides that voting would be inappropriate, taking into consideration the cost of voting the proxies and the anticipated benefit to the Funds. The Firm will monitor the potential for conflicts of interest with respect to proxy voting as a result of personal relationships, significant client relationships, potential conflicts of interest among Funds or special circumstances that may arise during the conduct of ITE’s business. If a conflict of interest is identified, the Firm will not make related proxy voting decisions until it has been determined that the conflict of interest is not material or a method for resolving the conflict of interest has been agreed upon and implemented. The Chief Compliance Officer will determine whether a conflict of interest is material. Materiality determinations will be based on an assessment of the particular facts and circumstances. The Chief Compliance Officer will maintain a written record of all materiality determinations. In the event the Firm does vote a proxy, the Funds may obtain information about such proxies and how they were voted by contacting Hayley Stein at [email protected]. please register to get more info

A. The Firm does not require or solicit prepayment of more than $1,200 in fees per Fund, six months or more in advance and therefore has not included a balance sheet. B. The Firm does not believe that there are any conditions that are reasonably likely to impair its ability to meet contractual commitments to the Funds. C. The Firm has never been the subject of a bankruptcy petition.
ITEM 19. REQUIREMENTS FOR STATE-REGISTERED ADVISERS
This Item is not applicable to ITE. please register to get more info