Item 5. Fees and Compensation
A.L. Stuart offers its services on a fee basis, which is based upon assets under management.
Investment Management Fee
A.L. Stuart provides investment management services for a quarterly fee based upon a
percentage of the market value of the assets being managed by A.L. Stuart. The firm’s quarterly
fee is exclusive of, and in addition to brokerage commissions, transaction fees, and other related
costs and expenses which are incurred by the client. A.L. Stuart does not, however, receive any
portion of these commissions, fees, and costs.
For all accounts, A.L. Stuart’s quarterly fee is charged, in arrears, as a percentage of the market
value of the assets being managed or advised by A.L. Stuart on the last day of the calendar
quarter.
For discretionary accounts, between 0.25% (equivalent to an annual fee of 1.0%) and 0.375%
(equivalent to an annual fee of 1.50%) of the market value of the assets under management or
advisement and the type of services to be rendered.
For non-discretionary accounts, the quarterly fee varies between 0.125% (equivalent to an
annual fee of 0.50%) and 0.1875% (equivalent to an annual fee of 0.75%) of the market value of
the assets under management or advisement and the type of services to be rendered.
For certain non-discretionary clients, the firm may recommend that clients invest in one of its
model portfolios, which are managed on a discretionary basis. If a client invests in one of the
firm’s model portfolios, the client may pay both a non-discretionary advisory fee and
discretionary management fee. Clients are advised that a conflict of interest exists to the extent
that A.L. Stuart recommends a client invests in one of its discretionary management portfolios
where the firm would receive additional compensation. Nonetheless, the Firm will seek to
ensure that any such recommendation is in the best interest of its clients.
The fees to invest in the Private Fund are disclosed in the Offering Documents.
A.L. Stuart, in its sole discretion, may negotiate to charge a lesser fee 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, pre-existing client, account
retention, pro bono activities, etc.).
Fees Charged by Financial Institutions
As further discussed in response to Item 12 (below), A.L. Stuart generally recommends that
clients utilize the brokerage and clearing services of one of more financial institutions for
investment management accounts, although the firm receives no remuneration for doing so.
A.L. Stuart may only implement its investment management recommendations after the client
has arranged for and furnished A.L. Stuart with all information and authorization regarding
accounts with appropriate financial institutions. Financial institutions include, but are not limited
to, any broker-dealer recommended by A.L. Stuart, broker-dealer directed by the client, trust
companies, banks etc. (collectively referred to herein as the “Financial Institutions”).
Clients incur certain charges imposed by the Financial Institutions and other third parties such as
brokerage commissions and other transaction costs, fees charged by the Independent
Managers, margin costs, reporting charges, custodial fees, charges imposed directly by a hedge
fund, mutual fund or ETF in the account, which are disclosed in the fund’s prospectus or offering
documents (e.g., fund management fees and other fund expenses), deferred sales charges, odd-
lot differentials, transfer taxes, wire transfer and electronic fund fees, and other fees and taxes
on brokerage accounts and securities transactions. Such charges, fees and commissions are
exclusive of and in addition to A.L. Stuart’s fee.
In many circumstances, A.L. Stuart’s Agreement and the separate agreement with any Financial
Institutions authorize A.L. Stuart to debit the client’s account for the amount of A.L. Stuart’s fee
and to directly remit that management fee to A.L. Stuart. Any Financial Institutions that act as
the qualified custodian for client accounts that are authorized to debit the client’s account for
A.L. Stuart’s fees and remit those fees to the firm have agreed to send a statement to the client,
at least quarterly, indicating all amounts disbursed from the account including the amount of
management fees paid directly to A.L. Stuart. Alternatively, clients may elect to have A.L. Stuart
send an invoice for payment.
Fees for Management during Partial Quarters of Service
For the initial period of investment management services, the fees are calculated on a pro rata
basis.
The Agreement between A.L. Stuart and the client will continue in effect until terminated by
either party pursuant to the terms of the Agreement. A.L. Stuart’s fees are prorated through the
date of termination.
Clients may make additions to and withdrawals from their account at any time, subject to A.L.
Stuart’s right to terminate an account. Additions may be in cash or securities provided that A.L.
Stuart reserves the right to liquidate any transferred securities or decline to accept particular
securities into a client’s account. Clients may withdraw account assets on notice to A.L. Stuart,
subject to the usual and customary securities settlement procedures. However, A.L. Stuart
designs its portfolios as long-term investments and the withdrawal of assets may impair the
achievement of a client’s investment objectives. A.L. Stuart consults with its clients about the
options and ramifications of transferring securities as necessary. However, clients are advised
that when transferred securities are liquidated, they are subject to transaction fees, fees assessed
at the mutual fund level (i.e. contingent deferred sales charge) and/or tax ramifications.
If assets are deposited into or withdrawn from an account after the inception of a quarter, the
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