Item 5 Fees and Compensation
As a general matter, the Firm’s management, or advisory fee for a discretionary engagement
service ranges from 0.1% to 1.00%, depending on the nature and complexity of the assignment.
Such amounts are typically paid monthly or quarterly in advance and are calculated on the
market value plus accrued interest of the assets on the month-end or quarter-end, as the case
may be. For more complex engagements, which may include leverage, hedging, shorting of
securities etc., we may also include an incentive or performance allocation of up to 20% which is
paid annually. Notwithstanding the foregoing, depending on the nature of the assignment, the
Adviser may enter into engagements with higher management fees or incentive allocations.
In addition, in certain circumstances, the Adviser may provide investment advisory services on a
fee-only fixed fee basis based upon various objective and subjective factors, determined after
discussion between the client and the Adviser. The terms and conditions of any such
engagement shall be set forth in an agreement between the Adviser and the client. Please
Note: Adviser’s affected fixed fee clients could pay different fees based upon these subjective
factors, which services could be available from other advisers at lower fees.
The Adviser’s Advisory fees are generally deducted from the custodial account of the client in
compliance with regulatory procedures and consistent with the terms of the agreement
between the Adviser and the client. With respect to Muni Opps, the fund’s administrator
calculates the net asset value on a monthly basis and calculates the fee prior to its release to
the Adviser. In the event that the Adviser bills the client directly, payment is due upon receipt
of the Adviser’s invoice. Generally, the Adviser shall deduct fees and/or bill clients monthly or
quarterly in advance, based upon the market value plus accrued interest of the assets on the
last business day of the previous month. The standard managed account agreement between
the Adviser and the client will continue in effect until terminated by either party by written
notice in accordance with the terms of the Investment Advisory Agreement. To the extent the
client withdraws, or the account is terminated prior to the end of such prepaid period, the
Adviser will issue a rebate for such unused prepaid services.
The municipal bond market is over the counter and as a result, most of the trading is done as a
trade away – that is, not directed through the client custodian. When 16th AA, as Sub-Adviser for
16Rock, buys or sells a bond for a client of the Adviser, the price or yield that is negotiated by 16th
AA for the bond may include a “mark-up” by the executing dealer. Such price or yield
negotiated for the given trade is the price or yield for the bond reflected on the client’s account
statement. There is no extra fee charged by the Adviser or Sub-Adviser. As a general matter,
custodians for the Adviser’s services charge flat ticket fees for each municipal bond trade. The
per ticket amount is generally subject to the size of the account and the amount of trading. In
certain instances, the custodian may charge an asset-based fee in lieu of a ticket fee. To the
extent the Adviser purchases equities or other “commission” based products, there may be
additional fees or expenses passed through to the client.
The Adviser generally requires a minimum asset level of $500,000 for investment advisory
services. The Adviser, in its sole discretion, may charge a lesser investment management fee
and/or waive or reduce its minimum asset requirement based upon certain criteria (i.e.,
anticipated future earning capacity, anticipated future additional assets, dollar amount of
assets to be managed, related accounts, account composition, negotiations with client, etc.).
With respect to private funds and pooled investment vehicles, the terms of withdrawal are
outlined in detail in the private offering documents but usually require a notice period and a
specific date and may include limits on the amount and frequency of the withdrawal.
None of the Adviser, its affiliates, nor their employees accept compensation from the sale of
securities or other investment products.