Item 5 – Fees and Compensation
Asset-Based Fees and Compensation. The Funds pay the Adviser or an affiliate of the Adviser an
asset-based investment management fee each quarter in advance in an amount up to 2% per annum
based on the value of the net assets of the respective Fund on the first day of the quarter (the
“Management Fee”). If an investor invests during a quarter or makes an additional subscription
during a quarter, the Management Fee is charged as of the effective date of such subscription based
on the value of the assets as of the applicable date and is prorated for the numberof days remaining
in the quarter. The Adviser, or its affiliates, may elect to reduce, waive or calculate differently the
Management Fee for investors that are firm personnel or affiliates of the Adviser, any family
member or estate planning vehicle of such person, and for a strategic advisorto the Adviser and its
affiliates. Macro GP will not be charged the Management Fee.
For advisory services provided to clients whose assets are managed in SMAs, LSM typically
charges the clients investment management fees based on a percentage of the net asset value of the
assets under management. SMA clients generally pay the Adviser an asset-based management fee
each quarter, in advance, in an amount up to 2% per annum based on the value of the SMA’s net
assets on the first day of the quarter. SMA clients generally will receive invoices for such fees on
a quarterly basis. If for any reason, SMA clients terminate their IMA, LSM will refund the SMA
client a prorated portion of the unearned, prepaid management fee (if any). All management fees
for SMA clients (amount, basis and timing) are negotiable based on a client’s assets under
management. In addition, our SMA clients generally pay for all of their own operating and other
expenses. These include all expenses incurred with their account transactions, such as custodial
fees, brokerage commissions, taxes and any applicable registration fees, among others. An SMA’s
governing documents (for example, the IMA) governs the specific terms of the account including
fees and expenses borne by the SMA.
Performance-Based Compensation. The Adviser or an affiliate of the Adviser is entitled to receive
annual performance-based compensation (the “Incentive Allocation”) from the Advisory Clients,
which is compensation that is based on a share of net capital appreciation of the assets of the Funds
and SMAs. The Incentive Allocation rate generally ranges from 10% to 40%, subject to a hurdle
rate in certain instances and is subject to a loss carryforward provision. The Adviser or an affiliate
of the Adviser may elect to reduce, waive or calculate differently the Incentive Allocation for
investors and/or clients that are firm personnel or affiliates of the Adviser, any family member or
estate planning vehicle of such person or a strategic advisor to the Adviser and its affiliates. In the
event that an investor in the Funds is permitted to withdraw or redeem completely or partially from
a Fund other thanat the end of the fiscal year, the performance-based compensation with respect to
such investor forsuch year will be determined, at the time of withdrawal, with respect to the portion
being withdrawn or redeemed through the applicable withdrawal date.
LSM deducts fees directly from the assets of Fund investors invested in the Funds. Investors in the
Funds do not have the ability to choose to be billed directly for fees incurred. SMA clients will
generally be billed directly on a quarterly basis for such fees.
LSM and/or a Fund has entered into side letters or similar written agreements with investors which
have the effect of establishing rights, or altering or supplementing the terms of, the relevant
governing documents including the Management Fee and Incentive Allocation. Such side letters
are primarily with respect to “most favored nation” provisions, capacity rights, and limitations on
compulsory withdrawals, modified indemnification obligations and provisions that provide
confirmation of existing Fund policies and/or the accommodation of particular tax, legal or
regulatory requirements applicable to a particular investor.
LSM and/or a Fund has issued a tranche of limited partnership interests to an anchor investor (the
“Anchor Investor”). An affiliate of the Anchor Investor is entitled to receive a payment from
LSM or any of its affiliates based on a portion of the asset-based compensation (including a portion
of the Management Fee) and of the performance-based compensation that is structured in the form
of an allocation or carry(including a portion of the Incentive Allocation). In addition, the Anchor
Investor is entitled, without limitation, to certain notification rights, portfolio transparency and risk
aggregation reporting (for risk monitoring purposes), co-investment rights and “most favored
nation” rights.
In addition, LSM and/or a Fund may enter into “side letter” agreements with certain investors that
alter, modify, or change the terms of, among other things, the Incentive Allocation, Management
Fee, withdrawal rights (including withdrawal dates, withdrawal reduction amounts and notice
periods), minimum and additional subscription amounts, informational rights, capacity rights and
other rights. New classes of Fund interests may be established, or “side letter” agreements entered
into, by LSM and/or its affiliates without providing prior notice to, or recovering consent from,
existing investors. The terms of such classes or “side letter” agreements will be determined by
LSM and/or its affiliates in their sole discretion.
In addition to bearing the Management Fee and Incentive Allocation, if any, Fund Investors are
subject to their pro rata share of other applicable investment expenses as more fully described in
the offering documents of each Fund. Such expenses generally include, but are not limited to:
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