ITEM 5 – FEES AND COMPENSATION
Anchor Capital’s standard practice is to not charge its clients an investment advisory fee. If an
investment advisory fee is however, agreed to base upon varying circumstances, including
services to be performed. The quarterly investment advisory fee is generally in the range of
between 0.0875% to 0.1875% (0.35% to 0.75% per annum) depending upon the market value of
the assets under management and the type of investment advisory services to be rendered by
Anchor Capital. All billing is in arrears and charged on a quarterly basis. Fees charged to pension
plans, retirement plans, and institutional clients may be negotiable. Anchor Capital maintains full
discretion to set fees and/or waive any fees. Anchor Capital’s fees if charged, may vary
depending on the client’s financial representative and Anchor has discretion to adjust or waive its
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fees. In addition, Anchor Capital may have agreements with certain broker-dealers or registered
investment advisors to manage client accounts through the broker-dealers or registered
investment advisor’s custodian at a reduced advisory fee.
As part of Anchor Capital’s investment strategies, Anchor will include investing in various
mutual funds, or exchange traded funds which typically charge their shareholders various
advisory fees and expenses associated with the establishment and operation of the funds. These
fees are in addition to our fees and will generally include a management fee, shareholder
servicing, other fund expenses, and sometimes a distribution fee. If the fund also imposes sales
charges, clients may pay an initial or deferred sales charge. These separate fees and expenses are
disclosed in each fund’s current prospectus, which is available from the fund or your
representative can provide it upon request. Also, many mutual funds offer share classes that pay
shareholder servicing fees (12b-1 fees) to brokerage firms and their registered representatives in
consideration of their services to the fund’s shareholders. Additionally, mutual funds typically
offer various share classes of the same fund that will have different levels of fees and expenses
and depending on a variety of factors clients may be eligible to invest in them and pay lower
fees.
Use of Affiliated Mutual Funds and Model Portfolios
When Anchor Capital invests assets in your account in shares of our affiliated mutual funds and
Total Solution Portfolios (these Model Portfolios, contain a percentage of mutual funds in their
allocations, that are managed by Anchor), you are subject to those funds’ administrative and
operating expenses. In the case of the Anchor Risked Managed Funds, Anchor Capital serves as
the investment advisor. As the investment advisor, Anchor Capital receives directly from the
mutual funds, an investment management fees up to 1.60% per annum, payable in arrears but is
calculated and deducted from the fund daily, based on the capital account balance of each fund,
which is based on value provided by the underlying managing of the Anchor Risked Managed
Fund series and adjusted for capital activity at the fund level such as distributions and the
payment of fees and expenses that occurred during the quarter.
This compensation that we earn from the internal management fees paid from the funds creates a
conflict of interest by incentivizing us to use our funds and models, instead of other unaffiliated
mutual funds. We seek to mitigate this conflict of interest by disclosing this compensation to you
and not charging an investment advisory fee and/or in some circumstances presenting an
advisory fee discounts, which together help ensure transparent and fair pricing to our clients.
In addition, to the management fee, 0.49%-1.24% in each of the Anchor Risk Managed Funds
are subject to administrative and operating expenses borne directly by or allocated to such funds
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along with the pro rata expenses, fees and reserves from the underlying investments made by
each such fund. Anchor Risk Managed Funds expenses may vary for each fund, but typically
include, among others, administration, shareholder servicing fees (12b-1), legal, audit,
accounting, bank service fees such as wire fees, initial and ongoing registration filings and
annual tax preparation and filings. Specific management fee and related expense information
may be found in the fund prospectus and other offering documents as noted in the previous
section.
Anchor Capital also receives research and other products or services from broker-dealers and
third-party service providers for Anchor Risked Managed Funds referred to as “soft dollar
benefits.” Soft dollars are used to pay for research and data services utilized by Anchor Capital.
Anchor Capital receives the benefit but does not pay for these services. Soft dollar benefits
include a variety of research, investment information, and resources provided by third parties
that are expected to enhance Anchor Capital’s general portfolio management capabilities.
Anchor Capital obtains some of its soft dollar benefits through commission-sharing
arrangements (“CSAs”) with selected broker-dealers. Under CSAs, Anchor Capital arranges with
executing broker-dealers to “unbundle” their commission rates in order to allocate a portion of
total commissions paid to a pool of soft dollar credits maintained by a third party Soft Dollar
aggregator that can be used to obtain eligible soft dollar benefits made available by third-party
service providers at the direction of Anchor Capital.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, as amended and
regulatory guidance from the SEC; in circumstances in which Anchor Capital has brokerage
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