Item 5: Fees and Compensation
A. Fees Charged
All investment management clients will be required to execute an Investment Management Agreement that
will describe the type of management services to be provided and the fees, among other items.
The fee range stated below is a guide. Fees are negotiable, and may be higher or lower than this range, based
on the nature of the account. Lower fees for comparable services may be available from other sources.
Factors affecting fee percentages include the size of the account, complexity of asset structures, length of time
the client has been with the firm, and other factors. This annual fee will generally be based on the calculation
shown below, but may be higher or lower than. All clients, but especially those with smaller accounts, should
be advised they may receive similar services from other professionals for higher or lower overall costs.
Total Assets Under Management Annual Fee
Up to $10,000,000 1.00%
Above $10,000,001 0.90%
B. Fee Payment
Investment advisory fees will, at the client’s option, either be debited directly from each client’s account, or
paid by the client upon receipt of an invoice from Equidem. The advisory fee is due quarterly, in arrears, and
the value used for the fee calculation is the last market day of the previous quarter. This means that if your
annual fee is 1.00%, then each quarter we will multiply the value of your account by 1.00% then divide by 4 to
calculate our fee. Once the calculation is made, we will instruct your account custodian to deduct the fee from
your account and remit it to Equidem Capital.
Clients whose fees are directly debited will provide written authorization to debit advisory fees from their
accounts held by a qualified custodian chosen by the client. Each quarter, clients will receive a bill itemizing
the fees to be debited, including the formula used to calculate the fee, the amount of assets the fee is based, and
the time period covered by the fee. The invoice will also state that the fee was not independently calculated by
the custodian. The client will also receive a statement from their account custodian showing all transactions in
their account, including the fee.
C. Other Fees
There are a number of other fees that can be associated with holding and investing in securities, and some fees
that are specific to the type of investing in which Equidem Capital specializes.
Transaction Fees
You will be responsible for fees including transaction fees or commissions for the purchase or sale of a stock
or bond. Equidem does not recommend mutual funds as investments, but if a mutual fund is transferred into an
account Equidem manages, such funds do carry expenses such as management fees and trading expenses.
Expenses of a mutual fund will not be included in management fees, as they are deducted from the value of the
shares by the mutual fund manager. For complete discussion of expenses related to each mutual fund, you
should read a copy of the prospectus issued by that fund. Equidem Capital can provide or direct you to a copy
of the prospectus for any fund that we recommend to you.
Please make sure to read Section 12 of this informational brochure, where we discuss broker-dealer and
custodial issues.
Diligence Fees
Part of Equidem Capital’s investment approach involves the sourcing, diligence, and offering of tax-free
municipal bonds. Typically, when such a bond is offered, the diligence related to that offering is performed by
bond counsel. The expenses of this diligence would then be listed as a line item on the bond offering’s Source
and Use of Funds Statement (in other words, diligence fees would be paid as an expense of the offering, paid
from the total proceeds of the bond issue).
In some instances where Equidem Capital performs this diligence in-house, without the use of outside bond
counsel, Compound Capital will be compensated for the diligence on the issue the same way outside bond
counsel would be. The diligence fee will only be payable in bond offerings in which Equidem Capital has
acted as the originator of the issue, and not for secondary offerings. The diligence fee will be incorporated
into the bond price. This fee is in addition to, and will not cause an offset of, any client’s investment
management fee. The receipt of these fees gives rise to a conflict of interest, as the potential receipt of a fee
may incentivize Equidem Capital to close a bond transaction that Equidem Capital would otherwise not close.
This conflict is disclosed to clients verbally and in this brochure. Clients participating in a bond transaction
where Equidem Capital will be informed as to whether a diligence fee will be payable to Equidem Capital.
Equidem Capital attempts to mitigate this conflict by requiring that all investment recommendations have a
sound basis for the recommendation, documented standards for determining the advisability of closing a bond
transaction, and by requiring employees to acknowledge their fiduciary responsibility toward each client.
D. Pro-rata Fees
If you become a client during a quarter, you will pay a management fee for the number of days remaining in
that quarter. You may terminate the asset management agreement by providing written notice to Equidem
Capital. If you terminate our relationship during a quarter, you will be refunded the portion of any prepaid
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