Item 5 Fees and Compensation
Advisory Fees:
Option 1: CGAM's Standard Fee Schedule: Fees are based upon the market value of the assets
under management at the end of each calendar quarter based on the fee schedule provided below
and are charged in arrears. The fee is due and payable within 15 days after the end of each
quarterly period. The contracted relationship between CGAM and clients may be terminated by
either party upon 10 days written notice. If the investment advisory agreement is terminated, all
fees due to CGAM shall be prorated to the date of termination.
Option 2: Profit-Based Management Fee The fee is 20% of the profits of the portfolio being
managed by CGAM. Profits are defined as the change in the portfolio value, net of trading costs
and deposits/withdrawals. Dividends and interest are considered part of the profits. Fees will be
calculated and invoiced every 12 months following the anniversary of the account's opening date
and subsequently on a quarterly basis. Should there be a loss in a particular year, no fee will be
assessed, and the loss will be carried forward to reduce the profits accrued in future years. This
arrangement may create an incentive for CGAM to make riskier or speculative investments than
would be the case in option number 1. Also, CGAM may receive increased compensation with
regards to unrealized and realized gains in the client’s portfolio. If, prior to the first anniversary
of the account’s opening date, the Client terminates CGAM’s management of the account, the
Client agrees to be billed a prorated 1.0% annual fee based on Option 1. To select Option 2, the
SEC Rule 205-3 requires that a client have at least $1,100,000 under management with the
adviser (whether in one or several funds) or a net worth of $2,200,000 or are “qualified clients”
under Section 2(a) (51) (A) of the Investment Company Act of 1940. In selecting this option, the
Client acknowledges meeting one of these two conditions.
Any client opting for Option 2 (Profit-Based Management Fee) should qualify as a Qualified
Client. " Qualified Client " shall mean any person who comes within any of the following
categories, or who the issuer reasonably believes comes within any of the following categories,
at the time of the sale of the securities to that person:
(1) Any natural person whose individual net worth or joint net worth with that person's spouse, at
the time of his purchase exceeds $2,200,000;
(2) Any natural person who had an individual income in excess of $200,000 in each of the two
most recent years or joint income with that person's spouse in excess of $300,000 in each of
those years and has a reasonable expectation of reaching the same income level in the current
year.
Fee Schedule:
$0 - $1,000,000 1.00 %
$1,500,001 - $2,500,000 0.75%
Over $2,500,001 - Negotiable
Please note: Note: Please note that the fee Schedule is not tiered. For example, if the account assets are below $1,500,000.00,
the annual fees would be 1%. If the account assets increase above $1,500,000.00, the net annual fees would be 0.75%.
Fees are directly deducted from Discretionary accounts but are invoiced to non-discretionary
clients. For discretionary clients, fees are deducted at the end of each quarter in arrears. CGAM
accepts fees in the form of checks, Zelle payment and electronic wires.
Clients do not pay any other type of fees to CGAM besides the advisory fees. However, there
may be charges from the custodian, brokerage fees and mutual fund expenses.