Item 5 – Fees and Compensation
All fees charged by Citron are reasonable in light of our experience and expertise and the level of
sophistication of our investment clients.
Citron Capital, LP
We receive an asset-based management fee and a performance-based allocation for
serving as the general partner of the Fund.
The present management fee is 0.125% per month, payable in advance (approximately
1.5% annually). We reserve the right to reduce the management fee for investments by certain
institutional and high net worth investors.
Investors may make withdrawals from the Fund as of the last day of any month with
notice, any unearned management fee will be refunded.
The performance fee is 20% of the Fund’s profits earned in each fiscal year. For purposes
of this fee calculation, profits include realized and unrealized gains and losses but only to the
extent those new profits exceed previous losses that have not been recovered. This limitation,
also referred to as a “high water mark,” is intended to prevent us from receiving a performance
fee as to profits that simply restore previous losses. In other words, we are entitled to receive a
performance fee only to the extent profits through the current measurement period exceed the
highest level of profits for all prior measurement periods. Performance fees are deducted from
the assets of the Fund as of the end of each performance period, annually, or upon the date of a
withdrawal, in accordance with the terms of the Fund’s constitutional documents. We reserve the
right to reduce the performance fee for large investments by institutional and high net worth
investors.
The Fund also charges a mid-year redemption fee for withdrawals from the Fund as of a
date other than the last day of a fiscal year. The mid-year redemption fee is equal to 2% of the
withdrawn amount.
We believe our fees are competitive; however lower fees for comparable services may be
available from other sources.
Separately Managed Accounts
We receive asset-based management and performance-based fees for those accounts for
which we provide personalized asset management services.
The management fee is equal to 0.125% per month (approximately 1.5% per year),
payable monthly in advance. The management fee will be appropriately prorated and refunded
to reflect any withdrawals or contributions which occur during a month.
Our annual performance fee is 20% of the increase in the net assets of your account during
the calendar year (as measured at the close of business on the last day of such calendar year). No
performance fee is paid with respect to any client’s account unless the net assets of the account
is greater than the Prior High Net Assets. The “Prior High Net Assets” of an account is the net
assets of that account immediately after the determination of a performance fee with respect to
that account (or if no performance fee has yet been determined with respect to that account, the
net assets of the account immediately following its opening). The performance fee will be
appropriately prorated to reflect any withdrawals and contributions which occur during a year.
For separately managed accounts, we generally require that you provide authorization for
us to deduct our fees directly from your investment account. Important information about the
deduction of management fees:
• You must provide authorization for us to deduct fees by initialing the appropriate
section of our Investment Management Agreement.
• You will receive a detailed invoice each month which outlines our fees and how
they are calculated at the same time we request payment from the custodian.
• You will receive a statement from your custodian which shows your holdings.
• You are responsible for reviewing the accuracy of the fees being billed, as the
custodian will not do so.
You many terminate the Investment Management Agreement under which we manage a
separate account: (1) as of the end of a year upon at least forty-five (45) days prior written notice
provided, however, that a client may terminate as of a date other than the last day of a year with
payment of a mid-year termination fee equal to 2% of the terminated account balance; or (2)
without penalty, upon written notice within five (5) business days after entering into the
Agreement. Fees paid in advance will be prorated to the date of termination and any unearned
portion thereof will be refunded to you.
Other Fees and Costs
In addition to the management fees and performance fees discussed above, expenses
associated with making investments on behalf of separately-managed accounts also will be
incurred.
Investment-related expenses may include some or all of the following: commissions, bid-
ask spreads, mark-ups, interest on margin borrowing, costs relating to short sales, clearing costs,
transfer taxes and custodian fees. Our investment strategy may involve a high level of trading,
and the turnover of its portfolio may generate substantial transaction costs. These costs will be
borne by the separately managed account regardless of profitability. Item 12 further describes
the factors we consider in selecting or recommending broker-dealers and determining the
reasonableness of their commissions and other compensation. Lower fees for comparable
services may be available from other sources.
We are also entitled to be reimbursed by the Fund for most of the Fund’s direct and
indirect operating costs and expenses. These may include, for example, the Fund’s ongoing
accounting, auditing, bookkeeping, tax preparation, administration, legal, consulting and other
professional fees and expenses and costs associated with dissolution, winding up, liquidation or
termination of the Fund. The expenses of operating the Fund may be substantial, and may exceed
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