Item 5 – Fees and Compensation
Cutler’s fee schedule is stated below. Fees are subject to negotiation. In addition, for
family and friends of the Firm, the Firm may, in its sole discretion, reduce or waive
management fees in their entirety. The specific manner in which investment advisory
fees are charged by Cutler is established in a client’s written agreement with Cutler.
Except as otherwise agreed to in writing, Cutler charges an annualized management fee
based on a percentage of assets under management (AUM), typically including cash and
cash equivalents. Depending on the practices of the client’s custodian or record keeper,
the annualized fee calculation is based on month-end AUM, quarter-end AUM, applied to
the ending daily average AUM, or applied to an average AUM of the last trading day of
each month during the quarter. In all cases, fees are billed in arrears.
Clients authorize Cutler (or their record keeper) to directly debit fees from their
account(s), however, in certain circumstances, Cutler elects to invoice clients for their
investment management or consulting fees. Unless otherwise agreed upon, Cutler does
not provide invoices to those accounts whose fees are direct debited. Clients are asked
to refer to their custodial statement to review actual fees paid. Accounts initiated or
terminated during a calendar quarter will be charged a prorated fee and upon
termination of any account, any earned, unpaid fees will be due and payable.
Cutler’s fees are exclusive of brokerage commissions, transaction fees, and other
related costs and expenses which shall be incurred by the client. Clients will incur certain
charges imposed by custodians, brokers, and other third parties such as those charged
by outside investment managers, custodial fees, 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. Mutual funds and exchange
traded funds also charge internal management fees and other operating expenses,
which are disclosed in a fund’s prospectus. Item 12 (below), further describes the factors
that Cutler considers in selecting or recommending broker‐dealers for client
transactions and determining the reasonableness of their compensation (e.g.,
commissions).
Clients who invest in the Cutler affiliated mutual fund also indirectly “pay” the fund’s
operating expenses. A portion of those fees include a management fee paid to Cutler.
The current annual management fee paid to Cutler is 0.75% for the Cutler Equity Fund.
Those management fees are accrued daily and paid to Cutler monthly in arrears. Certain
fee waivers apply as indicated in the fund’s prospectus that could lower the amount Cutler
actually receives. From Cutler’s fee otherwise charged to a retirement plan, Cutler
subtracts credits that reflect the plan’s proportionate share of the fees the Cutler Funds
paid Cutler. To compute those credits, Cutler will count the plan’s assets invested in a
Cutler Fund as of the same last trading days used to determine your before-credit fee, and
will count the Fund’s assets on each of those same days. For each Cutler Fund the plan
holds (or held) shares of, Cutler will compute the ratios of the plan’s portion of the Fund’s
assets. Regarding each Fund, Cutler will average the ratios and apply the result against
Cutler’s fees from the Fund paid in the quarter-year to determine the portion attributable
to the plan. Note: For institutional or retirement plan clients, Cutler does not recommend
DIVHX, although Plan Sponsors may still elect it as part of their plan’s fund line up.
Clients should understand that all the fees and any other charges described in the above
paragraph are paid out of the assets in the client’s account (unless otherwise agreed upon
in writing) and are in addition to the investment management fees charged by Cutler. It is
important that clients review the fees charged to their account(s) to fully understand the
total amount of all fees charged. Clients should understand that lower fees for
comparable services may be available from other advisory firms.
Actual fees charged are provided in the client contract. For retirement plan
accounts, Cutler's fee schedule is:
Assets Under Management Fee
< $1,000,000 1.00%
> $1,000,000-$2,000,000 0.80%
> $2,000,000-$5,000,000 0.60%
> $5,000,000 Negotiable
We charge a minimum fee of $5000 per year for ERISA/retirement accounts. Larger
minimum fees may apply depending on the client negotiated fee structure. Retirement
plan fees are charged proportionate as above (tiered), unless otherwise indicated in the
client agreement.
Fees are collected quarterly in arrears, which produces a compounding effect on the
total rate of return net of management fees. As an example, the effect of investment
management fees on the total value of a client’s portfolio assuming (a) [$1,000,000]
investment, (b) portfolio return of [8%] a year, and (c) [1.00%] annual investment
advisory fee would be [$10,416] in the first year, and cumulative effects of [$59,816]
over five years and [$143,430] over ten years. Actual investment advisory fees incurred
by clients will vary.
The fees for account balances over $5,000,000 will be negotiated based upon the size,
complexity, and the amount of time involved in managing the assets or other factors
that Cutler and the Plan Sponsor determine appropriate.
At times, and in the sole discretion of the firm, Cutler will perform services pursuant to a
fixed annual fee negotiated with the client and assessed quarterly. In such instances,
clients are provided an invoice at the end of each quarter with payments due within
fifteen days of delivery. Any such fixed fee arrangements will be included as part of the
client agreement.
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