Item 5 - Fees and Compensation
For Separately Managed Accounts (SMAs):
As compensation for our advisory services, each SMA Client will generally pay a 1.00% investment
management fee based on assets under management. Blue Room’s annual investment management fee will
be paid quarterly, based on the value of the portfolio on the last business day in the quarter. All investment
management fees are paid in arrears and will be prorated at the beginning or end of the SMA Client’s
engagement with Blue Room. Unless otherwise agreed upon in a Client investment agreement, Blue Room’s
management fee shall be debited from the SMA Client’s account in accordance with the custody exemption
that requires 1) Clients provide us with written authorization to withdraw fees; 2) that a statement is sent
directly to the Client by a qualified custodian at least quarterly; and 3) we provide Clients with an invoice that
includes the detail of the fee calculation. Blue Room encourages you to compare account statements sent
directly to you from your custodian to any Blue Room-prepared reports or invoices.
Blue Room is authorized to directly deduct advisory fees from SMA Client accounts under a constructive
custody arrangement, subject to the Client's prior written authorization and in compliance with regulatory
requirements. Clients will receive detailed invoices explaining the basis of the fee calculation, and we urge
clients to review these invoices in conjunction with custodian-issued statements to ensure accuracy and
consistency. Please see item 15 – Custody for additional information.
Blue Room will utilize pricing information provided by the administrator of Blue Room’s Client assets to
value a Client’s portfolio and to calculate management fees. Based on the reporting service utilized by the
custodian, a Client may receive custodial statements which reflect slightly different valuations for certain
securities. Custodial fees may be charged by a bank, trust company, or brokerage firm for recordkeeping and
safekeeping of clients’ assets. Custodians will send Client statements at least quarterly directly to Blue Room
clients. Clients may incur brokerage commission charges when buy or sell transactions are executed. For
further information on Brokerage Practices, please see Item 12. Clients should contact Blue Room directly if
they believe there may be an error in their custodian statement or in the invoice received from Blue Room.
Other Expenses
SMA Clients of Blue Room may incur additional expenses in addition to Blue Room’s management fee,
including but not limited to custody fees, transaction fees, and administrative fees. These expenses, as
applicable, will be outlined in each SMA Client’s investment advisory agreement.
In addition to our advisory fee, SMA Clients bear trading costs and custodial fees associated with their
accounts. These expenses may include:
(i) all costs and expenses of transferring the assets to the account.
(ii) all taxes and governmental fees and charges incurred by the account (including all
withholding taxes).
(iii) all brokerage commissions and other trading costs and fees, underwriting discounts, sales
loads, spreads, and other similar charges; and
(iv) all charges of U.S. depositories and of any custodian and/or other service providers.
To the extent that SMA Clients’ accounts are invested in unaffiliated mutual funds or unaffiliated exchange-
traded funds, the accounts will indirectly share in the private funds underlying expenses including a separate
layer of management, trading, and administrative expenses.
Termination of the Advisory Relationship
An investment advisory agreement may be terminated at any time by the Client for any reason, upon receipt of
written notice. Blue Room may cancel at any time according to the terms specified in the investment advisory
agreement and with written notification to the Client. Fees will be prorated for an account that is terminated
during a quarter based on the number of days the account was actively managed through the termination date.
The termination date is defined as the date any written or verbal notice was received by Blue Room from the
Client to terminate the advisory relationship. Blue Room will provide the Client written confirmation of the
account termination.
This Agreement may be terminated by Client, without penalty or fees, upon written notice within five (5)
business days after entering into this Agreement. Thereafter, Agreement may be terminated: Upon receipt of
written notice, by either Client or Adviser, provided such termination does not cause Client to forfeit any
prepaid fees unless such otherwise forfeitable fees are reimbursed to Client. In the event of termination after
five (5) business days from the execution of this Agreement, Client will be assessed a prorated fee based upon
the number of days completed in the current quarter at the termination date.
For Private Funds:
Management and Performance Fees: The terms regarding management and performance fees for Private
Funds managed by Blue Room are detailed in the respective Fund Governing Documents. These documents
outline the structure of the fees, including the calculation of management fees based on the private fund's assets
under management and performance fees based on the private fund’s profits, subject to a high-water mark
provision to ensure fairness and alignment of interests between Blue Room and the private fund investors.
Expenses: Private Funds are also subject to various operational, administrative, and investment-related
expenses, which are outlined in any Private Fund Governing Documents. These may include, but are not limited
to, legal and auditing fees, custodial and brokerage fees, as well as expenses related to specific investments of
the fund. Investors should refer to the Private Fund Governing Documents for a comprehensive overview of
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