Item 5 - Fees and Compensation
Kingdom Ridge and affiliate Kingdom Ridge GP receive two distinct forms of compensation, a
management fee based on a Fund's assets under management and an incentive allocation based on a
share of capital gains on or capital appreciation of the assets of a Fund.
Kingdom Ridge receives a quarterly Management Fee calculated as follows: (i) 0.5% (i.e., 2.0% per
annum) for Sub-Class A interests/shares and (ii) 0.375% (i.e., 1.5% per annum) for Sub-Class B
interests/shares. The Management Fee attributable to the new Sub-Class C interests/shares is
calculated using different rates as total Master Fund net assets increase. When Master Fund net assets
are below $500 million, the Management Fee rate applicable to Sub-Class C interests/shares is 0.375%
(i.e., 1.5% per annum); when Master Fund net assets are at least $500 million but less than $750 million
the Management Fee rate decreases to 0.3125% (i.e., 1.25% per annum); when Master Fund net assets
are over $750 million but less than $1 billion the Management Fee rate decreases to 0.25% (i.e., 1.0%
per annum). In addition, if the net assets of the Master Fund equal or exceed $1 billion, the Management
Fee rate shall equal the lesser of (i) 0.25% (i.e., 1.0% per annum) and (ii) the ratio of the Adviser’s good
faith estimate of the quarterly operating budget over the Master Fund net assets. The Management Fee
is paid quarterly in advance based on the value of the net assets of each investment and is prorated for
intra-quarter contributions and redemptions. All contributions and redemptions may be made monthly.
The Incentive Allocation is an amount equal to a percentage of the aggregate net profits (including
realized and unrealized gains), allocated to each investor after making up any losses carried forward from
prior years. The incentive allocation percentages are as follows: (i) 20% of the net profits attributable to a
Sub-Class A investment and (ii) 17.5% of the net profits attributable to a Sub-Class B and Sub-Class C
investments. The incentive allocation is allocated to Kingdom Ridge GP, an affiliate of the investment
manager, at the end of the fiscal year.
In its sole discretion, Kingdom Ridge may reduce, waive or modify fee terms for any investor. Kingdom
Ridge has waived the management fee and incentive allocation for all employees who are invested in the
Funds.
The calculation of the management fee and incentive allocation is based on the calculation of each
Fund’s net asset value which includes the valuation of securities positions. Each Fund’s offering
documents describes the valuation procedures utilized to calculate each Fund’s net asset value.
Kingdom Ridge deducts applicable fees from each investor’s capital account. Investors do not have the
ability to choose to be billed directly for fees incurred.
Investors and prospective investors should refer to the offering documents of the applicable Fund for a
complete detailed description of its respective fee schedule.
Other Fees and Expenses
The Funds will bear their own expenses including, but not limited to, investment-related expenses such
as commissions, interest on margin accounts, borrowing charges on securities sold short, administration
fees and expenses, legal expenses, audit and tax preparation expenses, corporate licensing, director
fees, custodial fees, taxes, and other direct expenses associated with the operation of the Funds.
Prepayment of Fees
As noted above, the management fees of the Kingdom Ridge Funds are paid quarterly in advance.
Should an investor join or redeem from the Funds at a time other than the beginning of the quarter, the
management fee will be pro-rated for the period invested in the Funds. Investors may redeem from the
Funds on a monthly basis. Any accrued but unpaid incentive allocation will be paid as of the redemption
date.
Neither Kingdom Ridge nor its affiliate are broker-dealers and, consequently, receive no commissions or
other compensation in connection with the purchase and sale of securities.