Item 5: Fees and Compensation
Kerrisdale charges management fees and/or performance allocations or fees to its Client Accounts. The
Funds also bear their own operating expenses. Separate Accounts are charged management and
performance-based fees that are subject to negotiation, as are the expenses that are borne by such
Separate Accounts.
As described generally below, and more specifically in each Fund’s Constituent Documents, the fee
schedule for the Funds is as follows:
Management Fee: Depending on the class/series of shares/interests of the relevant Fund, Kerrisdale
charges a quarterly management fee, payable in arrears, equal to up to 0.5% of assets under
management as of the end of each quarter (2.0% per annum), pro-rated for partial quarters. Kerrisdale
reserves the right to waive or reduce management fees for certain investors, including employees, family
members, strategic partners, advisors and consultants and others as may be determined in Kerrisdale’s
sole discretion.
Performance Allocation: Depending on the class/series of shares/interests of the relevant Fund, an
affiliate of Kerrisdale charges an annual performance allocation equal to up to 20% of the appreciation
in net asset value of assets under management during each year, but only to the extent that such
appreciation causes the net asset value to exceed its high water mark. Kerrisdale and its affiliates reserve
the right to modify the fee structure as reflected in the Constituent Documents on new capital
contributions.
All fees from the Funds received by Kerrisdale are deducted directly from Fund or Investor accounts. Net
asset value includes net realized and unrealized profits and losses. The Performance Allocation is
calculated net of management fees and other expenses.
Kerrisdale bears certain of its own administrative and overhead expenses including, without limitation,
the costs and expenses related to: office space and utilities; telephones, computers and any other
telecommunications devices; general purpose office equipment and furniture; maintenance of books
and records; postage; and the salaries, bonuses and other compensation of traders, portfolio managers,
back office staff and secretarial, clerical and other employees.
In addition to the Management Fee and Performance Allocation described above, each Fund will bear
its own expenses (for these purposes, including a pro rata share of any relevant master fund expenses,
if applicable), generally including, without limitation, investment expenses, whether or not such
investments are consummated; brokerage commissions (see Item 12, “Brokerage Practices” for a more
detailed discussion of brokerage and transaction costs); expenses relating to short sales, clearing and
settlement charges; custodial fees; bank service fees; interest expenses; expenses relating to
consultants, brokers or other professionals or advisors who provide research, advice or due diligence
services with regard to actual or prospective investments (which may include a share of any profits
realized by the Fund from investment ideas generated by consultants or on which consultants provide
substantial services); appraisal fees; investment banking expenses; trading-related compliance
expenses; expenses relating to the public promotion of research involving investment ideas (including
fees and expenses of public relations firms, cost associated with use of social media and other web-based
forms of communication, costs of maintaining a website for research ideas, costs related to conferences
utilized for the purpose of promoting research with regard to a Fund investment such as marketing,
conference venue, travel and lodging expenses of Firm personnel participating in such conferences);
costs of engaging in marketing or being affiliated with an activist campaign (including proxy agents,
public relations firms, investigation firms, legal and litigation expenses, and fees and expenses of
proposed board members); research costs and expenses (including subscription and other fees for news,
quotation, reports, financial databases, and similar information and pricing services); investment-related
travel expenses (which are travel expenses of Firm personnel or consultants related to the purchase, sale
or transmittal of, or due diligence regarding the Fund’s investments, whether or not such investments
are consummated); professional fees (including, without limitation, expenses of consultants, attorneys,
accountants and other experts) relating to investments; fees and expenses relating to software tools,
programs or other technology utilized in managing the Fund (including, without limitation, third-party
software licensing, implementation, data management and recovery services and custom development
costs); research and market data (including, without limitation, any computer hardware and connectivity
hardware (e.g., telephone and fiber optic lines) incorporated into the cost of obtaining such research
and market data); compliance and regulatory expenses for the Fund (including fees and expenses with
respect to any FATCA compliance); administrative expenses (including fees and expenses of the
Administrator); legal expenses in connection with the Fund’s ongoing operations (including the updating
of the Fund’s offering documents, processing transfer requests, negotiations with prospective investors
and extraordinary legal expenses, such as those related to litigation or regulatory investigations or
proceedings); offering expenses (including related travel expenses, attendance at capital introduction
meetings and similar conferences, but excluding placement agency fees and related expenses); external
accounting and valuation expenses; audit and tax return preparation and filing expenses; costs related
to errors and omissions insurance and directors and officers insurance for the Firm (to be shared by the
the Adviser, the funds and other accounts, with Kerrisdale bearing 50% of such costs); fees and expenses
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