Item 5: Fees and Compensation
The fees applicable to each Fund are set forth in detail in each Fund’s offering documents and prospective
investors should review those documents carefully. A brief summary of such fees paid by the Funds are
provided below.
Management Fees
The Investment Managers receive a monthly Management Fee from some of the Funds equal to 1/12 of
the applicable Fee multiplied by the Net Asset Value of the relevant series of Shares, before deduction of
that month’s Management Fee or any accrued Performance Fees. Management Fees may vary for each
Fund and are explained more fully in each Fund’s offering documents. Management Fees are prorated for
partial periods.
Performance Compensation
The Investment Managers are generally entitled to receive a Performance Fee, if any, from the Funds
payable annually in arrears in respect of each calendar year (a “Calculation Period”). The Performance Fee
is equal to a percentage of the appreciation in the Net Asset Value of the relevant series of Shares during
the Calculation Period above the Base Net Asset Value of that series of Shares. The “Base Net Asset Value”
of a series of Shares is the greater of (i) the Net Asset Value of that series of Shares at the time of issue, and
(ii) the highest Net Asset Value of that series of Shares achieved as at the end of any previous Calculation
Period (if any) during which such series was in issue, adjusted appropriately in respect of any redemptions
of Shares of that series.
The Performance Fee in respect of each Calculation Period is calculated by reference to the Net Asset Value
of each series of Shares before deduction of any accrued Performance Fee. The Performance Fee is payable
to the Investment Managers in arrears within 15 Business Days of the end of each Calculation Period.
However, in the case of Shares redeemed, exchanged or transferred during a Calculation Period, the
accrued Performance Fee in respect of those Shares is payable within 15 Business Days of the date of
redemption, exchange or transfer, as the case may be. In the event of a partial redemption, Shares will be
redeemed on a “first-in-first-out” basis unless the redeeming Shareholder advises a Fund’s administrator
otherwise in writing. Performance Fees may vary for each Client and are explained more fully in each
Client’s offering documents.
From time to time, the Investment Managers, at their sole discretion and out of their own resources, may
decide to rebate to intermediaries and/or Investors part or all of the Management Fee and/or the
Performance Fee. Any such rebates may be applied in paying up additional Shares to be issued to the
Investor or may (at the discretion of the Investment Managers) be paid in cash.
In the Investment Managers’ sole discretion, the Management Fees and/or the Performance Fees may be
waived, reduced or calculated differently with respect to certain Investors.
Expense Pass-Through
Certain Funds, in lieu of, or in addition to, a Management Fee, have agreed to utilize a full or partial “cost
pass through” (“CPT”) costs and expenses model with the Investment Managers. Broadly speaking, this
means that certain Funds are responsible for their own expenses, as well as for some or all of the
Investment Managers’ expenses (including compensation of personnel). Pass-Through Expenses are fully
disclosed within each Fund’s offering documents. These generally fall into two categories: (i) transactions
carried out by the Fund or on their behalf, and (ii) expenses related to the administration of the Fund.
Administration expenses may include, without limitation and subject to applicable law, the following: (a)
personnel costs, such as base salaries, variable compensation, employment related costs, recruitment
costs, or termination payments; (b) overhead costs, such as rent, business rates, or service charges; (c)
hardware expenses, as well as depreciation and amortization such as costs of purchasing or leasing
equipment; (d) data and research charges, as well as market data or licensing fees; (e) software-related
expenses; (f) travel expenses, such as business, investment or sales and marketing-related travel; (g) sales
and marketing fees paid to third parties; (h) professional expenses paid to service providers, including but
LMR Partners LLC LMR Partners LLC
not limited to: finance, payroll and tax, as well as legal, compliance, or related business advisory expenses;
(i) training and personnel development; (j) insurance expenses, including director and officer premiums;
(k) certain compliance and regulatory costs, including regulatory filings; and (l) taxes, including corporation
taxes, and other forms of entity level taxes paid to local/regional governments.
These other fees and expenses, as well as dealing commissions and other non-monetary benefits, payable
by the Funds are charged at normal commercial rates. Feeder funds bear their proportionate share of any
fees, charges, and expenses incurred by the related master fund through their investment therein (which,
in the absence of any other feeder fund or other investor in such master fund, will be all of them).
Certain costs are excluded from pass-through to the Funds. Such exclusions are determined by the
Investment Managers in their sole discretion and include, without limitation:
• Office artwork;
• Private business travel exceeding the value of an equivalent first-class commercial fare;
• Settlements with regulators, censures or penalties;
• Personal expenses of the Firm’s partners (e.g., entertainment, charitable contributions, or other
non-business-related expenditures); and
• Depreciation charged on assets that were already allocated to one or more Fund(s) when purchased.
There is no maximum amount of fees, charges, and expenses that will be borne (directly or indirectly) by
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